Ukraine's gas races

Ukraine's gas races

Azerbaijan, Baku, Sept. 14 / Trend , A.Badalova/

During a two-day official visit to Ashgabat, which has begun today, Ukrainian President, Victor Yushchenko is discussing with his counterpart the resumption of direct deliveries of gas from Turkmenistan to Ukraine, which were halted in 2003 due to Gazprom's becoming re-exporter of the Turkmen gas.

Earlier, Ukrainian Ambassador to Turkmenistan Viktor Maiko said that the volume of the Turkmen gas supply to Ukraine may reach 10-15 billion cubic meters.

According to the western analysts, the Ukrainian president's visit is an illustrative purpose and part of his pre-election campaign.

"Ukrainian president's visit to Turkmenistan is predominately driven by Mr Yushchenko's political competition with Prime Minister Yulia Timoshenko before the January 2010," Expert on the Energy Research at the Oxford University, Shamil Yenikeyeff wrote to Trend in an email.

In early September Timoshenko reached an agreement with her Russian counterpart Vladimir Putin on the future of Russian-Ukrainian gas relations. This involves the reduction of Russian gas sales to Ukraine due to the shrinking domestic demand which could save Kiev from paying hefty fines to Moscow.

Naturally, if Timoshenko avoids any gas disputes with Russia before the presidential elections scheduled for 17 January 2010, Victor Yushchenko could lose his post. Yushchenko now needs a boost to his political standing with the electorate and sees a potential gas deal with Turkmenistan as a counterweight to the Timoshenko-Putin gas deal.

From a logistical point of view, it would be impossible for Ukraine to buy Central Asian gas without some degree of Russian involvement, Yenikeyeff said. At the moment, all Central Asian gas exports run through the Russian territory.

"In the foreseeable future, Central Asian gas will also be exported to China via the Turkmenistan-China gas pipeline which is currently being constructed," Yenikeyeff said.

In the past, Russia bought Central Asian gas under the DAF conditions at the border of the particular Central Asian supplier (Turkmenistan, Uzbekistan, and Kazakhstan).

At the moment, Yenikeyeef believes, Ukraine can only secure Central Asian gas deliveries via Russia despite all the political rhetoric about "the direct supplies of Turkmen gas to Ukraine".

If Russia agrees with the direct Turkmenistan-Ukraine gas trade, then this will be another matter, Yenikeyeff said.

"However, even in this case, Ukraine and Turkmenistan will be required to negotiate transit fees and a new transit agreement with Russia," he added.

The expert believes in the next few months Russian-Ukrainian gas relations will be driven by domestic political processes in Ukraine before and immediately after the presidential elections.

"If the newly elected Ukrainian president consolidates power at home relatively quickly, and manages to prevent political squabbles within the domestic political establishment, relations with Russia could stabilise. At the same time, potential political instability in Ukraine is likely to lead to new gas disputes with Russia," Yenikeyeff believes.

There is a domestic political agenda to Victor Yushchenko's visit - to demonstrate he has a plan to establish alternative gas supply to Ukraine and reduce dependence on Russian, believes Andrew Reed, the American Analyst of Energy Security Analysis.

"The gas issue and relations with Russia are at the center of the presidential election campaign," Reed wrote to Trend in an email. "Yushchenko is taking an anti-Russian position, while Prime Minister Yulia Timoshenko is positioning herself as capable of finding a common language with Russia."

Reed believes, Yushchenko's approval ratings and chances of re-election, however, are quite low.

"Russia. So it is unlikely that foreign partners will see much potential in his initiatives in the gas sphere," Reed said.

Just the day before Yushchenko's visit to Ashgabat, the President of Russia, Dmitry Medvedev met with his Turkmen counterpart Gurbanguly Berdimuhamedov. The sides agreed to resume the Turkmen gas deliveries to Russia. The Turkmen president said all issues related to the resumption of the Turkmen gas supplies to Gazprom were solved.

In April, after the accident on the Central-Asia-Center-4 gas pipeline, Turkmenistan halted gas sale to Russia.

Reed believes Russian control of Central Asian gas will weaken over time, but it is unlikely Ukraine can significantly influence this process.

"Ukraine's geopolitical position and infrastructure make it an attractive transit partner for gas delivery to Europe, but political and socioeconomic instability make Ukraine a risky partner," Reed said.

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