EU Brokers a Gas Deal between Kiev and Moscow

Written by | Wednesday, November 5th, 2014

The European Union managed to broker an agreement between Russia and Ukraine over gas supplies during the upcoming winter. The deal will ensure that there will be no unexpected cut in gas supplies to EU countries via Ukraine. Jose Manuel Barroso, the out-coming chief of the European Union, said that “there is no reason for people in Europe to stay cold this winter”. European Union energy chief, Guenther Oettinger, stressed that he was confident that Kiev should be able to afford to pay the price for the gas to cover its own consumption. Mr Oettinger added that the deal may be the “first glimmer” of hope of better relations between Russia and Ukraine while Mr Barroso affirmed that the agreement is an important step for shared energy security in the European continent.

The brokerage of the deal follows lengthy negotiations between Kiev, Moscow, and Brussels. The terms of the agreement include the EU being a guarantor for Kiev’s gas purchases from Moscow and helping to meet outstanding debts. The total package is now worth almost $5 billion with money provided by the International Monetary Fund (IMF) as well as the EU. The statement issued by the European Commission said that the unprecedented levels of EU aid would be disbursed on time, and the IMF had reassured Kiev that it can use all funding it has at its disposal to pay for gas. According to the Commission official statement, “Further work with the international financial institutions on financial assistance to Ukraine, also in relation to gas supplies, will still continue. But all three sides are reassured that Ukraine will have the necessary financial means.”

Gas supplies were ceased as a result of belated payments when the Kremlin scrapped subsidies provided to Ukraine for importing gas, which meant that the price paid by Ukraine went up substantially. However, Alexander Novak, Russian energy minister, assured that “Russia has always been a reliable supplier of energy resources to Europe and other consumers.” The deal is considered good news for both Ukraine and the EU ensuring that both Ukrainians and Europeans will have enough heat in the upcoming winter. Yet, observers say it is too early to say whether the agreement has the potential to herald a breakthrough in Russian-Ukraine relations.

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