Kiev Thinks Up Clever Way to Preserve Ukraine's Gas Transit-Country Status

Ukrainian national oil and gas company Naftogaz CEO Andriy Kobolyev says that Ukraine will have a hard time maintaining its status as a transit country for Russian gas deliveries to Europe unless European companies become more involved in the management of its gas transportation network.

In an interview for the 5 Kanal television channel on Wednesday, Kobolyev said that Naftogaz was open to any offers on sharing their business with European companies in order to preserve Russian gas transit through Ukraine to Europe after 2019, the year when the current transit contract with Gazprom ends.

Kobolyev also warned that Russia's efforts to move forward with the Nord Stream 2 and Turkish stream gas pipeline projects would result in Ukraine being completely deprived of its status as a gas transit country. Earlier, the CEO calculated that the completion of both projects would also result in a fivefold drop in the value of Ukraine's gas transport system infrastructure.

Called Russia a "very powerful opponent" and admitting that Europe has been given a very attractive offer with the Nord Stream 2 project, Kobolyev nevertheless stressed that deliveries of Russian gas to Europe that bypass Ukraine would actually be more expensive for consumers.

Nord Stream 2 is a follow-up to Nord Stream, a pipeline network which runs through the Baltic Sea from Russia to the German coast, thus bypassing Eastern Europen transit states. Among its benefits is the guarantee that transit countries will not be able to take politically motivated measures to blackmail Russia or Western European countries by deciding to turn off the taps. 

Russian gas giant Gazprom has had numerous disputes with Ukraine in the past over the use of its gas pipeline network, with Kiev repeatedly threatening to shut off transit to Europe during winter periods and demanding that Russia reduce prices on the gas it sold to Ukraine.

In late 2015, Kiev stopped buying gas from Russia, citing high prices, which factually resulted in an end to its price disputes with Gazprom. Instead, the country is now paying marked up rates for Russian gas that is pumped back into Ukraine from EU countries, including Slovakia.

Last week, Forbes contributor Kenneth Rapoza pointed to a dramatic decrease in transit to Ukraine over the last month, and suggested that if Russia's bypass pipelines get built, "Ukraine will have to find new ways to make money from the energy business, instead of relying on the easy and steady flow of Russian gas transit fees."

On Thursday, Ukrainian opposition figure Viktor Medvedchuk warned that Ukraine's loss of its status as a transit country will help turn it into a "logistical backwater." The politician blamed the country's current authorities for the country's poor future prospects, noting that while Russia, Kazakhstan and Belarus are developing infrastructure to take advantage of their common customs area under the Eurasian Economic Union, Ukraine is 'entertaining fantasies' about replacing Russia in China's Great Silk Road project.