Russia and Ukraine failed to reach a new gas transit deal on
Thursday, but said talks were “constructive” and they would meet again to try
to find an agreement before the current one ends.
There are a
number of obstacles to a deal, such as a political row between Kiev and Moscow,
a pro-Russian insurgency in eastern Ukraine, and litigation between Russian gas
supplier Gazprom and Ukraine energy company Naftogaz.
Ukrainian Energy Minister Oleksiy Orzhel said there was still a
risk Russian gas deliveries could be interrupted and Kiev would make the
necessary preparations to ensure continued supply in such a scenario.
The Russia-Ukraine gas transit agreement expires in January.
Ukrainian energy authorities are worried Moscow could stop gas supplies through
Ukraine, leaving some parts of the country without gas in winter.
Moscow is building new pipelines to Europe, such as Nord
Stream-2 and TurkStream, to bypass Ukraine, a main route of the Russian gas to
Kremlin-controlled gas giant Gazprom (GAZP.MM
) supplied Europe with more than 200 billion cubic meters (bcm) of gas, of which 87 bcm went through Ukraine, providing Kiev with valuable transit income.
Orzhel said Gazprom was seeking lower transit tariffs, which was
possible if Moscow agreed to higher volumes.
His Russian counterpart, Energy Minister Alexander Novak, said
he had proposed a temporary extension of the existing 10-year contract.
Ukraine is also working on changes to its energy regulations to
bring them in line with EU laws.
Ukraine has stop buying Russian gas since the end of 2015 at the
height of tensions with Moscow. Novak said gas transit via Ukraine would depend
on the volumes Kiev buys from Moscow.
It was the first time the sides met since Volodymyr Zelenskiy
became the president of Ukraine. Animosity between Moscow and Kiev runs high,
especially since the Kremlin annexed Crimea from Ukraine in 2014 and sided with
rebels fighting government troops in the east of the country.
The EU’s top energy official, Maros Sefcovic, was chairing the
Thursday talks in Brussels and sounded upbeat after the 40-minute, three-way
said the sides had agreed a future contract should be based on EU law and it
was important that Ukraine’s Naftogaz would be broken up, creating a new
company to handle transit of gas through Ukraine.
“We would resume our meeting at the political level by the end
of October, when I hope we will have much more progress achieved on the issues
that we put on the table today,” Sefcovic said.
He added Ukraine currently had 4 billion cubic meters more gas
stored than at the same time last year, meaning it had more resources to draw
on in case of problems.