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EU:No Role To Play In Possible Russia-Ukraine Gas Tie

EU:No Role To Play In Possible Russia-Ukraine Gas Tie
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Πεμ, 6 Μαΐου 2010 - 18:31
The European Commission has no role to play at the moment in a possible combination of Russia's and Ukraine's gas companies, European Commissioner for Energy Guenther Oettinger said Thursday.
The European Commission has no role to play at the moment in a possible combination of Russia 's and Ukraine 's gas companies, European Commissioner for Energy Guenther Oettinger said Thursday.

"The decision has to come from Kiev and Moscow, and not from Brussels," Oettinger said after meeting Ukraine's Energy Minister Yuriy Boyko in Brussels, commenting on Russian Prime Minister Vladimir Putin's surprise idea of merging Russia's energy giant OAO Gazprom (GAZP.RS) with Naftogaz, Ukraine's national gas company.

"It's too early, for today there is no reason for any activity of the European Commission," he said, explaining the European Union would only check if the operation is in line with EU energy laws if it happened.

Kiev is drawing closer to Moscow under new President Viktor Yanukovych, and Putin caught the world by surprise Friday by suggesting the combination.

" Ukraine 's response will be made public after we estimate everything based on our national interests," Yanukovych said late Wednesday. "If we decide to start such negotiations, we should certainly invite the EU [European Union] to them at some stage, as it remains the main consumer of gas and main partner."

Analysts have said a direct tie-up of Gazprom and Naftogaz is extremely unlikely because Kiev, even with the new government, would be unlikely to let the much larger Russian gas company dominate its smaller, debt-ridden Ukrainian partner and its strategic pipelines to European gas consumers.

"Prime Minister Putin was most likely 'flying a kite' with the suggestion of a full merger, to gauge the reaction in Kiev and Brussels and as a distraction in order to make 'Plan B,' a joint venture that holds an equity interest in the Ukraine pipeline system, more palatable," said Chris Weafer, chief strategist at UralSib Capital in Moscow.

A cash-rich joint venture, perhaps including European gas consumers, could upgrade Ukraine 's pipelines and boost transmission from the Caspian Sea region, sounding a "death knell" for the EU-backed Nabucco gas pipeline, Weafer said.

In any case, greater co-operation between Gazprom and Ukraine would minimize the risk of contract disputes and gas disruptions to central and western Europe.

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