Europe can play a role in reforming the gas sector in Ukraine, but not the one to which some politicians say. In the long run, European technology and know-how can help Ukraine reduce consumption of gas (which is the main priority) and establish a market-based mechanisms. However, in the near future, neither Brussels nor the governments of countries - EU members, most likely, will not deal with the problems with payment for imported gas, which is NAK Naftogaz of Ukraine.

One of the reasons why Europe will help Ukraine to a lesser degree than would be desirable - it is their differences, most pronounced in January when the Russian-Ukrainian gas conflict. On the one hand, European companies associated with Russia, trying to reduce its dependence on Ukraine as a transit. On the other - the official Brussels, dealing with gas issues through a political prism, hopes to do to get rid of dependence on Russia as a supplier. And one other principle in the context of Ukraine to consider the problem of reliable supply. There is no long-term solutions to the problem of energy saving, although the only way Ukraine can reduce its dependence on Russian gas and to prevent new gas war.

division of Europe

course, the word division is the attitude within the EU to this issue is too simplistic, but still more accurate than the big statement that Europe is already close to that of solidarity, as stated in the Treaty of Lisbon in 2007, or that Europe would talk to the suppliers in one voice, as stated in the second report of the European Commission (EC) of the Energy Strategy.

differences between the major European energy companies, and deal with Brussels and vnutrisoyuznyh issues and relations with the suppliers that are not members of the European Union. Severe side bet in 2007 - about the so-called third package of EU legislation aimed at further liberalization of the EU energy market (in particular, markets natural gas and electricity) on the principle of separation of property. That is, by fragmentation of vertically integrated companies such as Electricite de France and the German E.ON. France and Germany, supported by these and other companies that are opposed to such plans. In April of this year, after a year and a half battles, the European Commission and European Parliament have made a compromise: EU countries have received the right to decide whether to apply the principle of separation of property.

With regard to relations in Europe to import Russian gas, it is very ambiguous and has its own history. In the 70-80-ies of the last century, the Soviet Union to export gas to Europe on long-term - up to 30 years - a contract with the German, Austrian and Italian energy companies. These contracts provide a stable supply, but also increases the dominance of vertically integrated companies in domestic markets. These corporate relationships has created and expanded a system of gas transportation from the former Soviet Union in Europe, most of which in 1991 inherited the Ukraine. Unfortunately, as we know readers of PN, Ukraine also inherited the industry and housing and utilities, whose work was based on the consumption of cheap gas in huge quantities. The collapse of the Soviet Union and the subsequent decision to pay for gas in the U.S. were among the causes of today's problems which remain unsolved until now (the dependence on imports, the conflicts with Russia because of the price and transit, etc.).

Soviet Union has long been there, the European Union expanded beyond recognition, but the business links between European energy companies and Gazprom are preserved. The latest fruit of their collaboration - the beginning of production in the past year, gas at the southern field in Western Siberia. Minority shareholders of the project - E. ON and Wintershall, and Dutch Gasunie cooperate with Gazprom in the project pipeline Nord Stream. This pipeline is planned to a Russian company, with 2010 or 2011, Russian gas will come to Germany, bypassing Ukraine and Belarus.

Not surprisingly, these companies look at the relationship with Russia does not like the EU, the position of which affects a much larger number of factors.

Firstly, at the Brussels politicians very tangible impact of geopolitical deterioration of relations between Russia and the West. In 2003-2005, many of them, like their American colleagues, rash nadavali many promises Ukraine and Georgia, considering that they come from the influence of Russia.

Second, taking steps toward market liberalization, European politicians entered the conflict with Gazprom and other Russian companies. (When the EU proposed to introduce a rule of third-party access in the draft Protocol on transit to the European Energy Charter, Russia saw this as an attempt to pump Central Asian gas through its territory without its control.)

And thirdly, the EU concerns about excessive dependence on Russia as an energy supplier has increased with the occurrence of a number of Eastern European States, which are much larger than the old Europe, dependent on these energy sources.

in political discussions on this topic too much demand and many became the phrase security of supply, which originally belonged to the access to energy, their inventories, adequacy of infrastructure, etc. - Everything, which determines the availability of cheap energy.

dispute between Russia and Ukraine

All these factors led to the reaction of Europe to the Russian-Ukrainian gas conflict. Compare how attitudes towards Ukraine in Europe has changed over the period between the quickest conflict in January 2006 and the wider crisis in the current year. In 2006, many European politicians still hope to change that inspired the orange revolution. When, in response to the cessation of supplies of Russian gas, Naftogaz has been selected the one that was destined for Europe, no European political leaders did not complained about the apparent violation by Ukraine of its obligations under the Energy Charter Treaty (ratified by Ukraine, and Russia - not). But in December 2008 on
attitudes of European politicians has changed: now they were ready to consider the possibility of imposing liability for the failure to supply gas to Kiev. Now, The Energy Charter Secretariat in a serious tone reminded Ukraine of its obligations as a signatory. In Brussels policy silently agreed.

during the January gas crisis, the EU initially stated that he would not interfere in purely commercial conflict. European mission to monitor the flow of gas, the need for which arose even in the first days of January, when Gazprom and Naftogaz reported conflicting data on the volume and direction of the stream, began to work only on 11 January, when exports to Europe gazopotok stopped completely.

That crisis was a turning point. 20 January, when gas started to come back to Europe, European Commission President Jose Manuel Barroso said: It is simply unacceptable that Europe had been held hostage by the dispute between Russia and Ukraine. Security of supply has become the main political agenda, and the measures taken to maintain it, revealed the tectonic faults in European politics.

The reaction of European power in the January crisis was as follows: they decided to move gazpromovsky project Northern stream on the transportation of Russian gas to Germany via the Baltic Sea to reduce the dependence of Europe and Russia from transit through Ukraine and Belarus. At the February meeting with European and American bankers, Gazprom and its German and Dutch partners to decide where in the midst of the global financial crisis to 3.5 billion euros for the construction of the pipeline. Significant government support provided by Germany and Italy - in billion euros each. Their export credit agency issued a warranty on the purchase of pipes and pay for engineering work. At this time, pending approval from the Swedish environmental authorities, the consortium Nord Stream works with banks to obtain the missing half a billion euros.

no absolute guarantee that the pipeline Nord Stream built, but the likelihood is very high. This project has progressed much further than the Nabucco - a project of gas supplies from Central Asia and /or the Middle East to Europe, bypassing Russia (as well as Ukraine). This year, it is possible to finance the construction of only one of two pipeline Nord Stream, but if both of the pipeline will earn, they will be 55 billion cubic meters of gas per year - almost half the amount that the last few years pass in transit through Ukraine. And Russia has reduced its dependence on Ukrainian transit, and Ukraine will become much harder bargain.

Brussels approved the Nord Stream (which in 2001 considered the project, meet European interests ), but this year's work and went in other directions. Firstly, the EU has supported the political agreement for the supply of gas from non-Russian sources (a declaration in support of the project Nabucco, adopted in Prague on May 8). Secondly, the EU called on energy companies to develop small projects that would have made Europe less vulnerable to disruptions in gas supply. For example, to increase the gas reserves in the vaults, gas pipelines to adapt to a possible reverse regime, to build terminals to import liquefied gas (for such projects the EU is ready to allocate from its budget several hundred million euros).

And thirdly, the European Union has developed legislation (published in July), a clear division of responsibilities for the mutual assistance among member countries in the event of an emergency situation with the supply of energy.

Finally, March 23, the EU convened a conference on the financing of the investment modernization of Ukrainian gas transportation system. The January crisis has again raised the question of the reliability of the Ukrainian GTS, and that has an extended period of investment in it to be very low. In a memorandum at the conference stated that the financial institutions (World Bank, European Investment Bank, European Bank for Reconstruction and Development) can provide funds, subject to serious efforts by the Government of Ukraine to reform the gas sector.

Europe - Ukraine savior?

It was felt that investkonferentsiya Brussels - EU assistance to Ukraine that the EU wants to save her tube and does not allow it to move into the hands of Russia. But it is not. International financial organizations have stated that the money Ukraine odolzhat only on strict conditions: the reform of the gas sector to increase tariffs to the European level and the establishment of European regulations on the gas market, third party access to the TCU and storage, the reorganization of Naftogaz. For such changes for many years advocated by many representatives of the Ukrainian gas sector, but they will not happen soon.

During the past two months, when Naftogaz hardly managed to pay for deliveries of Russian gas, Kiev and Brussels to continue negotiations on the loan. Of course, if the financial organization of a good pressure, they might, and down this year, but they are determined not to give Ukraine any long-term loans until the start of reform.

March 23 in Brussels was a lot of promising applications, but in fact, European institutions do not want to without regard vzvalivat a cargo of Ukrainian problems. European real policy primarily aimed at preventing disruptions in gas supply and to mitigate their effects. In the area of the gas into the broader context of Brussels is also cautious. At this position influence on the one hand, the policy favoring the diversification of sources of gas, on the other - a more pragmatic utility.

The strength of influence of these companies clearly shown before the start of the Brussels conference, when the Secretariat of President of Ukraine proposed to move the point of sale of Russian gas to European consumers in the western to the eastern border. This would make the issue of gas transit through Ukraine is not Russia and Ukraine, and European-Ukrainian. In the presidential administration, and apparently believed that this decreased the risk of possible future crises.

EU representatives on the move rejected such a proposal, knowing that to be made by European companies buying bulk of Russian natural gas under long-term contracts. The EU had to deal with companies that for decades have been successfully working with Gazprom and deliver Russian gas to Europe. An important factor in those commercial relations is the fact that Gazprom takes over the risks of transit, inherited from the Ministry of Foreign Economy of USSR. Physical delivery of the item record in long-term contracts, the risks of transit to this point built into the price. Such a system is quite satisfied with European companies and European Union to go against them does not want.

What can Europe

In practice, the role of the EU in solving the problems of Naftogaz to pay for Russian gas - of secondary importance. More important role the IMF and its lending Ukraine. (So far, judging by the actions of the fund, he would prefer to lend to Ukraine itself, rather than Gazprom or other Russian zaymodateli credit Naftogaz. )

Any serious cooperation in gas sphere between Europe and Ukraine should be a long-term, and here I would single out three points.

the first. I hope that Ukraine is ignoring calls from some Europeans blindly adopt the methods of reform that have worked in other countries, and therefore will work in Ukraine. It is believed, for example, that the liberalization of the British gas market in the 90's - is that neither is suitable for a model for Ukraine. But in the 90's in the UK: a) built up its own gas production, which turned the country from its importer exporter, and b) an existing mature market economy and standard of living was one of the highest in the world, c) acting regulatory bodies, who worked on the reforms supported by the Government. Nevertheless, in spite of all these factors (none of which exists in Ukraine), the UK still rage about the controversy, whether the solid foundation laid for further investment and liberalization. Many believe the answer is no.

second moment. Ukraine has thus come to play ball. Take, for example, underground storage (UGS), most of which are located in the west, a few kilometers from the border with the countries of Central Europe, where such facilities are few. That's where a huge potential resource. March memorandum called for a third-party access to these objects on transparent commercial terms. This proposal can be implemented regardless of the geographical location of the point of sale of Russian gas. The process will take weeks, months or years because of the need for legislative changes and corporate reforms, but its usefulness is obvious. Another area of cooperation could become a gas production in Ukraine. This could bring the European (and other foreign) companies, but the conditions need to be more attractive and more transparent.

Moment of the third, and so far the chief. Europe and Ukraine can develop cooperation in the field of energy conservation. Thus Ukraine will reduce its chronic dependence on Russian energy, which is at the root of most of its problems with energy. Even before the crisis, thanks to credit the Bank and other international financial organizations, as well as new European technology, was able to significantly reduce energy costs in the Ukrainian steel industry. In a much smaller scale, but no less successful, and telling the EBRD jointly with European companies and Ukrainian partners, has undertaken several projects to introduce energy-saving technologies in the district heat. Need to price reform in the communal sector, with mandatory payment of social grants to vulnerable citizens, and here Europe can also share their experience. Such cooperation - a long-term, the results are not immediate, and a great attention of the press, it is. But it is - the best way to reduce dependence of Ukraine on Russian gas and to reduce that tension, that this dependence creates.

Piran Simon (London)

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