“The current timing is favourable for signing, as the political situation in Ukraine has changed in favour of the EU, and its leverage is likely to be at its strongest. However, Brussels has to brace for Moscow’s reaction”, – says Mr. Grätz and underlines that “the worst-case scenario would be a gas cut-off to the EU”, however this overreaction wouldlikely be short.
He urges that unlike oil, gas is not an indispensable fuel. “A gas cut-off would thus backfire on Russia, as it would discredit natural gas as a primary energy source in Europe. Thus, while Moscow’s precise reaction is difficult to predict, the EU should grasp the political opportunity and sign”.
“Signing the Association Agreement is crucial – it will, however, not be a panacea”, – admits expert and says that “the EU will have to take concrete measures to curtail Russia’s traditionally strong position in Ukraine’s gas sector”.
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Jonas Grätz urges that “it is precisely in the gas sector that the EU is stronger than it thinks – if it plays its cards swiftly and decisively”, because of the shattering economic crisis coupled with the shale gas “revolution” in the US. This situation has the benefit of leading to a substantial surplus on the EU gas market. Expert admits: “Lower prices mean that gas deliveries from the EU in reverse flow from West to East have become an attractive economic proposition. Thus, for the first time, Ukraine now has a clear short-term incentive to adopt EU rules in the energy sector that would make it part of the EU’s gas market. Ukraine has already joined the EU’s Energy Community Treaty in 2011.3 It obliges Ukraine to facilitate gas market”.
The expert stresses: “The EU should work swiftly to remove internal obstacles for reverse flow of gas to Ukraine. This would reassure Ukraine that sufficient gas can be sourced from the EU market. Whereas small amounts are already being supplied via Poland and Hungary, far greater capacities are available in Slovakia”.
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So, “with the carrot of enhanced supplies in hand, the EU should push Kyiv towards swift implementation of its obligations under the Energy Community Treaty”, urges Swiss expert.
“The EU should give full support to the modernisation of Ukraine’s pipeline system, as had been stipulated in 2009. The EU should try to get Gazprom on board – but only as a financial investor”, – mentions Jonas Grätz
