KYIV
Natural gas from the Caspian region could fill Ukraine’s transit system after the completion of the Nord Stream 2 pipeline and Kyiv is prepared to take action to halt Russian Gazprom’s bar on directing it through Ukraine, the head of the state-run Naftogaz said.
Yuri Vitrenko, appointed head of Naftogaz in April in a cabinet order bypassing normal corporate governance, has been in Washington trying to lobby support for President Joe Biden to proceed with sanctions against Nord Stream 2, which Ukraine views as a threat to its security. But the pipeline is virtually completed and U.S. Secretary of State Antony Blinken has described it as a “fait accompli”.
“It will be a game-changer because as we all understand there is a huge potential basically to transport Central Asian gas through Ukraine to Europe,” Vitrenko told the Financial Times. “We are talking about tens of billions of cubic metres . . . central Asian gas alone can fill the whole Ukrainian gas transit system.”
Vitrenko said action against Gazprom, which has blocked the flow of Central Asian gas for 15 years, would involve an arduous legal process including appeals to the European Union Executive Commission and, should that fail, arbitration. Vitrenko already led successful claims in the Stockholm Arbitration Court against Gazprom in 2017 and 2018 over pricing and transit agreements.
Vitrenko told officials in Washington that if Biden failed to impose the sanctions on Nord Stream 2, Congress could adopt legislation obliging the president to do so.
Ukrainian President Volodymyr Zelensky sought a meeting with Biden to discuss the pipeline ahead of the U.S. president’s meeting this week with Kremlin leader Vladimir Putin, but in the end, had to settle for an official visit to Washington later in the summer. Ukraine argues that Russia will feel even freer to apply undue pressure of all sorts on Ukraine once it no longer uses the country’s gas transit system.
The issue of the pipeline’s completion and compensation for Ukraine is certain to be on the agenda when the two leaders meet in Geneva.
NAFTOGAZ HEAD’S APPOINTMENT STILL MAKING WAVES
Vitrenko’s appointment – and the government’s suspension of Naftogaz’s Supervisory Board to carry it out – generated considerable controversy, with Blinken telling Zelensky and other leaders that it was a flagrant failure to allow big companies to be run strictly in compliance with corporate governance procedures.
Ukraine’s National Agency on Corruption Prevention – one of several bodies charged with combatting corruption in the ex-Soviet state – called for the appointment this week to be rescinded on grounds of conflict of interest in connection with Vitrenko’s previous job as acting energy minister.
The agreement on Russian gas transit through Ukraine runs out in 2024. Foreign Minister Dmytro Kuleba has been negotiating an agreement on compensation for Ukraine, expressing discontent with Germany over its support for Nord Stream 2.
“The gas pipeline should be used as a lever to encourage Russia to play a constructive role in the peace process in eastern Ukraine,” he told Germany’s Die Welt newspaper.
He also said that following Russian assurances that the mass build-up of Russian troops on the border in April had been scaled back, with most troops returning to bases, only about 12,000 troops of 100,000 deployed on the border had been actually withdrawn.
Ukraine has been importing much of its gas from Europe – much of it of Russian origin – since Moscow annexed Crimea and financed separatists occupying large swathes of eastern Ukraine in 2014.
The head of Ukraine’s Gas Transmission, Serhiy Makogon, meanwhile, said work is underway on modernising the final stretch of an 80 km pipeline from the Polish border to the Komarno compressor station in the Lviv region.
Even when completed, the pipeline will not be able to meet Ukraine’s goal of receiving from Poland 6.6 billion cubic metres – slightly more than half of Ukraine’s total annual imports.