The boss of the Ukrainian gas company Naftogaz does not consider the reached compromise with Russia being sealed.

The ninth round of negotiations in Berlin between the EU, Ukraine and Russia to find a compromise in the gas dispute has lasted for more than 5 hours. But in the Handelsblatt interview a few hours later the young boss of the Ukrainian gas company Naftogaz, Andriy Kobolyev, does not raise hopes that it will really stay warm in Europe’s flats this winter.

Mr Kobolyev, you have reached a compromise with EU Commissioner Günther Oettinger, the energy ministers of Russia and Ukraine and Gazprom boss Alexey Miller. So does this mean that a gas crisis in winter has been prevented?

There is no final compromise yet. There is only a proposal of the EU Commission for a solution, which needs to be discussed and approved by the governments of both countries.

And what does this compromise include?

A partial payment by Naftogaz of the received but not yet paid gas amount from Russia.

These are US$3.1 billion?

Yes. But it is debatable whether the quantity supplied is worth US$3.1 or – as demanded by Gazprom – US$5.2 billion. Russia has just unilaterally increased the price. We therefore have taken legal action against this move at the International Court of Arbitration in Stockholm. For the time being, we only pay half of our debt and US$1.9 billion for new gas supplies. Gazprom is then obliged to provide us with 10 bcm of gas this winter: five billion of which are fixed, the other five bcm as an option.

So everything is fine then?

Nowhere near. Naftogaz has two important requests: we demand from Gazprom a gas contract on a commercial basis. This is to ensure that Moscow cannot change the gas price as they want. We want an agreed market price. We no longer want Russian gas supplies, where Moscow can simply dictate higher prices than agreed and in case of non-payment cuts the gas supply. If Moscow believes that he is the nose ring for holding Ukraine, then we eliminate this nose ring.

And what is your second request?

We urgently need a new transit contract, otherwise a smooth and complete gas transit through Ukraine cannot be guaranteed.

And why is this?

Because virtually everything is in Gazprom’s hand. As long as there is no direct contract between our transportation subsidiary Uktransgaz and the European pipelines operator Eustream, Gazprom can manipulate and accuse us for diverting Russian gas or export too much. We need transparent transit supply contracts between Gazprom, Uktransgaz and Eustream for EU customers, correspondent to European law. We do not want to reinvent the wheel. We just want normal and transparent contracts, as in the EU.

If Gazprom supplies you with 10 bcm of natural gas, can Ukraine get through the winter without diverting Russian natural gas which has been foreseen for Europe?

Without doubt. This would be enough. Five bcm are sufficient and for security reasons we also want an option for five billion more. But this amount we actually want to obtain from EU countries through so-called reverse flow, i.e. delivery of European gas companies to Ukraine.

What is the problem with this?

It is very surprising that Hungary has stopped th agreed gas supplies to Ukraine shortly after the visit of Gazprom boss Miller in Budapest. This cannot be a coincidence.

You can still guarantee the transit of the full amount of the Gazprom gas, destined for Europe, through Ukraine?

No, the recent incident with Hungary is significant: Two EU companies, including a German one, have contracts with Hungary for gas delivery from there to Ukraine. But these are now simply stopped. Where is the European solidarity, where Russia’s reliability? Russia presses its customers. And it will do everything this winter to present Ukraine as an unreliable partner.

How?

No one but Gazprom can prove whether gas was diverted or not. During the gas dispute in 2009, Ukraine supplied 19 mcm of gas more to Europe than it has received for transit by Russia. Nevertheless, Gazprom claimed that we had stolen their gas. Therefore, we want that Ukraine is fully integrated into the European energy system. Gazprom should not continue to think that Europe’s gas market is their property. But Gazprom wants to keep its major weapon.

Which is?

Gazprom wants to continue supplying its gas to each EU country individually. By doing so Gazprom destroys a common European energy market and sets prices based on political will. Or why is it that Poland pays US$100 more for Russian gas than Germany? Why is it cheaper for us to buy gas in Europe than directly through Gazprom? Gazprom uses gas as a means to blackmail and this has to change.

And what are you doing yourself for more security of supply?

Naftogaz will significantly increase its own gas production. So far Ukraine produces 20 bcm of natural gas annually. This shall be increased significantly in the coming years. Therefore, we want to introduce market prices for gas in Ukraine, fight corruption in the country and create transparency. This should lead to enormous incentives for investments in light of the great reserves in Ukraine. Shell, Chevron and Texaco are already active here. And we invite other foreign investors to also start engaging here.

Also Gazprom?

Well, Russia has occupied two big Ukrainian reserves for gas and oil through the annexation of Crimea. Hence, Russia and Gazprom can only with difficulties be regarded as a purely commercial partner. In light of the war of Russia against Ukraine, you can hardly want Russian companies as normal investors.

Mr Kobolyev, thank you for the interview.

Questions were asked by Mathias Brüggmann.