Yanukovich might offer Gazprom and European companies share in Ukrainian GTS
Viktor Yanukovich's victory in Ukraine's presidential elections has not only opened a new chapter in Russian - Ukrainian energy relations, but especially new prospects in European - Russian gas relations. Last week, there was much speculation in Ukrainian and Russian press concerning possible scenarios around Ukraine's Gas Transport System (GTS), revision of the Russian - Ukrainian gas contract, and Ukraine's role in South Stream.
Yanukovich did not wait long to put his cards on the table when it comes to Ukraine's main asset, the GTS that serves to transport 80% of Russian gas to Europe. Yanukovich's main aim is to guarantee cheaper gas for the metallurgical industry in Eastern Ukraine, which is controlled by the interest groups that support him. In addition, he wants to preserve and increase Ukraine's role as main transit country for Russian gas to Europe, which is an important source of revenue.
To achieve these aims, Yanukovich has indicated he is ready to sit around the table with Russia and discuss the future of Ukraine's GTS which needs urgent modernisation. The new President is ready, in contrast to former President Yushchenko and Prime Minister Timoshenko, to partially privatise Ukraine's GTS. He has already suggested that Gazprom could obtain a third in a newly formed consortium.
In an interview with Russian news channel Rossiya-24 on 13 Feb., Yanukovich stressed that his plans weren't new and that he had proposed the creation of a GTS consortium five years ago in order to finance its modernisation. He added that over the past five years, a situation had emerged in which pipelines were being built to bypass Ukraine, a development that was not in Ukraine's interest. Here he clearly referred to Nord Stream and South Stream.
Without going into detail, Yanukovich stressed the importance of involving Russia and the EU in the modernisation of Ukraine's GTS. Russian daily Kommersant suggested that all that three sides would have a 33% share in the consortium.
Not unsurprisingly, Gazprom has reacted positively to Yanukovich' plans. The Deputy Director of Gazprom's Management Board, Alexander Medeved, told journalists on 9 Feb. that Gazprom was prepared to consider investing in the modernisation of Ukraine's GTS. However, there has not been much response from the EU yet.
EEO Focus: If the new President is able to find a consensus with Russia on a new gas price and the future of Ukraine's GTS, this will not change the fact that Ukraine's political arena remains divided. This is clearly illustrated by Timoshenko's refusal to accept the outcome of the elections on 13 Feb, possibly instigating a new phase of political instability. There is no guarantee that after this presidential term another chapter of unstable Ukrainian - Russian relations might effect transit security through Ukraine. Nevertheless a Russian - Ukrainian rapprochement is likely to put alternative Russian exports on a temporary hold.
