Oleksandr Narbut: Probability of the final gas deal with Russia does not exceed 50%


2 October 2014, Kyiv – Trilateral gas talks in Berlin did not demonstrate readiness of the Russian side to compromise. Russia demands initial payment in the amount of not less than USD 2 bln as well as payment of debt in the amount of not less than USD 3 bln by this year end, its position on the supply has almost not changed. It is still about pre-payment, meaning preserving conditions of the actual contract in force. Moreover as per Russia the condition for price decrease remains the decrease of export duties by the decision of the Russian Federation government. At the same time the position of Europe have considerably approximated the demands of the Russian side and at this point will be satisfied by any agreements for only not to put under threat gas supply to Europe. Such statement was made at a briefing in the Ukraine Crisis Media Center by the President of the Kyiv Institute for Energy Research Oleksandr Narbut. “Today the probability of the final deal in my opinion does not exceed 50% as Russia is not only unready to negotiate but also keeps putting pressure on our partners to have the reverse gas supplies decreased and in such a way make Ukraine be concessive,” – claimed Mr. Narbut.

According to Oleksandr, Ukraine traditionally has to count on itself only. EU Commission is now more focused on its new composition rather than on Ukraine issue. Moreover he voiced the concerns that its new composition could create new challenges for Ukraine as well. “We need to get ready to the next round of talks by ourselves building unified demands and a clear position based on expertise of experienced people who know Russian weak spots. Unfortunately our side cannot boast of this,” said Mr. Narbut. Ukraine has not signed certificates confirming it accepted services provided which means the debt amount has no confirmation. At the same time Ukrainian side is ready to pay part of the debt under the dispute that’s why the sides could well agree on the compromise figure. “It’s simply not in Russia’s rules to negotiate. Traditional formula of negotiations “a la russe” is to accept all Russia’s conditions, if the partner does not accept them – make him realize he has to,” said Oleksandr.

Ukraine consumes 9 sometimes up to 10 bln m3 of gas per month under low weather temperatures. According to the minimum scenario without restoring Russian gas supply for the nearest 6 months average supply level will be preserved at 4,5-5 bln per month. Taking this into account 17 bln m3 of gas will be in the gas storage tanks until 15-20 October, Ukraine could be using not more than 12 as the rest is buffer and is not subject to lifting. With 6 bln of reverse and a favourable scenario for own extraction in the amount of 10 bln m3 Ukraine could reach 28 bln m3 that could be enough under tough austerity measures. However if the winter turns to be cold according to Mr. Narbut’s forecast already by mid February there could be gas shortage. “Ukraine is not ready for winter. As per my estimations we did not receive al least 2 bln m3 of gas only due to ineffective operation of our energy bloc, and this is the exact amount that would have allowed us to conduct negotiations from stronger positions. Apart from that the government did not pay attention to the potential of the coal sector and oil residue capable of substituting gas for Ukraine,” claimed Oleksandr. That’s why we have to cooperate closely with Slovakia and Hungary re reverse supply as well as build competently internal energy policy. Ukraine’s position according to the President of Kyiv Institute for Energy Research shall be transparent, stand for Ukraine’s interests not contradicting to Russia’s interests just to not satisfy them in full.