Russia uses gas as a lever for annexation, says Ukraine official

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Russia has no interest in finding a compromise in the EU-mediated Ukraine gas transit talks and is using energy as a lever to weaken Kyiv in a bid to deepen the country’s annexation, a top official of Ukraine’s biggest utility, Naftogaz, told EURACTIV.com.

“The main geopolitical idea is to hinder Ukraine’s growth by depriving the country of three billion US dollars a year. That would make Russia’s life much easier,” said Yuriy Vitrenko, chief commercial officer at Naftogaz, Ukraine’s state-owned oil and gas company.

“That means that instead of the economic growth we have been experiencing in the last couple of years, we will have an economic decline, meaning that the population will say look, we don’t like it, maybe it would be better for us to go back to Russia. That’s what they are trying to achieve,” he said.

Vitrenko was referring to the failed trilateral gas talks between Russia’s Gazprom, Ukraine’s Naftogaz and the European Commission, which took place on Monday (21 January). again in May.

The core of the negotiation is the renewal of Ukraine’s gas transit deal to pass Russian gas to EU customers after the current contract expires at the end of the year.

Ukraine stands to lose about three billion US dollars of transit fees if a deal cannot be struck.

“Three billion dollars a year amounts to 3% of Ukrainian GDP,” Vitrenko said. “Our position is very straightforward, we want a new contract based on European rules”.

Russia’s position in the talks is also straightforward, but also very different. “What they are basically saying is that they don’t even want to start real negotiation,” Vitrenko said.

He referred to Russia’s bid to extend existing contracts signed in 2009 but on the condition of the “recovery of the balance in relationships” between Gazprom and Naftogaz.

That recovery implies that Naftogaz drops the Stockholm arbitration court’s decision from last February, which required Gazprom to pay compensation of $2.6 billion to Naftogaz.

Naftogaz, in turn, insists that “recovery of balance” should involve Gazprom adhering to the Stockholm court’s ruling, a position backed by the European Commission.

“We were discussing back and forth, it was clear that there was no consensus whatsoever,” Vitrenko continued.

The next meeting is planned in May, with no specific date yet. But Vitrenko said this would be too late to secure gas transit contracts for the following winter.

“Market and industry participants need to estimate how much gas they will need to inject for the next winter and the injection season starts in May, even late April. So, when we meet in May, that means it will be difficult for them to make estimations,” he said.

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