In a muddy stream

The protracted negotiations on a new price for Russian gas for Ukraine may go according to an unexpected scenario. Until now, Moscow has led them from a position of strength: they say that Ukraine as a transit country has nowhere to go anyway, it wants to replenish the treasury - let it agree to our conditions. And when the Nord Stream gas pipeline was launched in early November and the first Russian gas went straight to Europe along the bottom of the Baltic Sea, many in Moscow decided that Kiev’s stubbornness would soon come to an end, gas bypassing Ukraine was the best proof of worthlessness her ambition. But it was not there…

Today, let me remind you, Ukraine pays fabulous money for Russian gas - $450 per 1,000 cubic meters. And this is taking into account the discount of $100 per 1,000 cubic meters, which Russia exchanged for the presence of the Black Sea Fleet in Crimea until 2042. For comparison, Germany receives Russian gas supplied through Ukraine at about the same price - but without any discounts. Kyiv, of course, would like to quickly agree on a new and much lower cost of "blue fuel". But Moscow, which receives substantial profits from its CIS neighbor thanks to high oil prices (the price of Russian gas for Ukraine is tied to them with a lag of 6-9 months according to the contract formula), is not at all interested in new agreements. At the same time, it seems that all the trump cards are in Moscow's hands: after all, the current contract of 2009 was signed at the highest - the premier's - level and by no means at gunpoint (although now Yulia Timoshenko is "winding the term" for him). Even if Ukraine intends to challenge its provisions in the Stockholm Arbitration Court, it is unlikely that it will win. With the opening of the Nord Stream, Russia seems to have raised its shares even higher in the negotiations. However, looking more closely, you understand: the cards in Moscow's hands are mostly marked.

Simple arithmetic: Gazprom has about 22 billion cubic meters of contracted gas reserves that can be launched through the first branch of the new gas pipeline (with the annual capacity of Nord Stream 55 billion). At the same time, Europe receives from Russia annually 107–120 billion cubic meters, of which 70–80 billion pass through Ukraine. It turns out that overnight Nord Stream will not bury Ukraine as a transit country.

Moscow could push Kyiv aside if the second gas pipeline bypassing Ukraine, South Stream (it is designed for 63 billion cubic meters per year), was launched at full capacity. But its opening is a big question: the European Union flatly refused to include this project among the priorities. In principle, Gazprom can launch it, since there are bilateral agreements with the countries through which it must pass (Turkey, Bulgaria, Serbia, Romania, etc.). But our energy giant must work strictly according to the rules of the European gas market. That is, not only Gazprom, but also any other gas producer from the countries through which it is laid should have access to the pipeline. Reverse should be provided at the borders of countries in order to redirect gas to other EU members if necessary. And there are many other market rules that Gazprom is unlikely to agree to, accustomed to the comfortable role of a monopolist.

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The South Stream project is practically buried. Moscow still does not believe in this and hopes to put the squeeze on the intractable Europeans

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If you call a spade a spade, the South Stream project is practically buried. Moscow still does not believe in this and hopes to put the squeeze on the intractable Europeans. In the meantime, this has not happened, she is interested in every possible way in delaying negotiations with Ukraine. This is where political demands unacceptable to Kyiv, such as joining the Customs Union or selling the gas transportation system to Gazprom, appear.

But if Europe does not give up its positions on the South Stream, then Moscow will have to change its tone in negotiations with Kiev - after all, gas must be supplied to the West according to contracts, and Ukrainian pipelines are still indispensable. Then the price will be agreed upon. Unless Moscow will speak from a position of strength, but Kyiv.