WEDNESDAY, JULY 18, 2018
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Russia to resume pipeline discussions
Journal Staff Report

KIEV, Oct.1 - Russia agreed to resume discussions over construction of a pipeline across Ukraine to boost natural gas supplies to Europe following a meeting between the two prime ministers Friday, an official said Saturday.

Russian Industry and Energy Minister Viktor Khristenko is expected to arrive in Kiev in October to resume the discussions, Energy and Power Minister Ivan Plachkov said.

"There will be a second meeting, most likely in Kiev, where we will discuss the issue," Plachkov said.

The development represents only a moderate progress in talks during the visit by Prime Minister Yuriy Yekhanurov to Moscow Friday where he had planned to secure Russia's agreement to resume the construction.

The Ukrainian pipeline may eventually challenge another project, building of a North European Gas Pipeline under the Baltic Sea from Russia to Germany, for handling increased shipments of gas to Europe, analysts said.

Russian gas giant Gazprom abandoned the Ukraine pipeline project earlier this year apparently for political reasons following the election to the presidency of Viktor Yushchenko, a pro-Western politician.

However, after seven months of rising tensions between Kiev and Moscow, and following a sharp political crisis in Ukraine in September, the Ukrainian authorities have sent signals seeking to improve the relations.

One of such signals was an invitation to resume construction of the $2.8 billion pipeline across Ukraine that would be capable to move 29 billion cubic meters of gas to Europe annually.

Although details of the suggested offer were not disclosed, Ukraine may encourage Gazprom by allowing it to have a controlling stake in the new pipeline, apparently changing a 50-50 ownership that had so far been discussed, analysts said.

"We want to continue to develop integration in the energy sector," Yekhanurov said speaking at a press conference in Moscow after talks with his Russian counterpart Mikhail Fradkov.

Fradkov said: "We touched upon this issue, its complexity and difficulty. It required more detailed discussions and ordered the respective groups to intensify the talks."

In October, the parties will also discuss prices for natural gas that Russia will be charging Ukraine in 2006, and Yekhanurov signaled that he was optimistic that the prices will remain unchanged.

"Don't expect any sensations over natural gas," Yekhanurov told government ministers Saturday. "There is the government that will be ready to provide the needs of citizens whether in the summer or in the winter."

The comments suggests Ukraine may prevail in discussions with Gazprom and keep the gas price unchanged at $50/1,000 cu m in 2006, postponing the tripping of the price that had been suggested by Gazprom.

The issue is important for Ukraine as the skyrocketing price would deal a blow to the economy by making operation of many businesses, such as mineral fertilizer producers and steelmakers, unprofitable. (jp/ez)

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