Russia concerned over EU-Ukraine gas deal

24 March 2009

Ukraine yesterday signed an agreement with the European Union (EU) in Brussels for modernising its gas transportation system at an estimated $3.4 billion (€2.5 billion). However, Russia has raised concerns about EU's energy security if Moscow was not involved in the strategic renovation plan.

The agreement comes after a price dispute in January between Ukraine and Russia which resulted in a two-week disruption of gas supplies to Europe in peak winter.

With the proposed upgrade, Ukraine envisages to raise the gas transportation capacity from the present 140 billion cubic meters (bcm) a year to 200 bcm.

Russia, the EU's main gas supplier was concerned about the joint declaration which, the energy minister Sergei Shmatko told, paid little attention to Russia's needs who also wants to have a say on the deal. He said Ukraine's pipeline system built in the Soviet-era is closely linked to Russia and the declaration between Ukraine and EU should include Russia.

"The unilateral nature gives cause for concern and puzzlement, might lead to a great deal of damage to EU energy security, said Shmatko. "The draft declaration covers not only modernisation, but also foresees a radical revision for supply and trade of gas." ''Only a tripartite agreement will benefit everyone.'' He told.

EU officials stressed that the new deal is not intended to reduce Russia's importance as the bloc's primary gas supplier.