The April 2010 Russo-Ukrainian gas agreement and its implications for Europe

June 16, 2010 | 00:00

The April 2010 Russo-Ukrainian gas agreement and its implications for Europe

This study by Jonathan Stern, Katja Yafimava and Simon Pirani reviews the gas agreements made between Russia and Ukraine this year. The authors warn that while prospects for a new Russo-Ukrainian “gas war” have receded in the short term fault lines remain in the agreements that could cause problems in future – which is of concern to a European market dealing this week with the latest Russo-Belarussian dispute.

The authors point out that the agreements made between Russia and Ukraine in April to exchange a discount on Ukraine’s gas imports for an extension of the lease on Russia’s Black Sea naval base reverses progress made towards depoliticising gas relationships. They examine the transit diversification projects undertaken by Gazprom and major European energy companies such as Nord Stream which are reducing reliance on Ukraine and Belarus and argue that within two years the era of “gas wars” in their present form will be over.

The authors also analyse the Ukrainian gas sector’s outstanding problems including excessive consumption and negligible progress towards market reform and argue that unless tackled these will continue to obstruct Ukraine’s economic development.

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