Russia, Ukraine, and EU agree winter gas deal

Ukraine, Russia, and the European Union concluded an agreement on the supply of Russian natural gas on Friday evening (25 September) which the three parties said will ensure Ukraine and EU countries will have sufficient gas the coming winter.

The so-called “winter package”, valid from 1 October 2015 to the end of March 2016 was agreed by European energy commissioner Maros Sefcovic i and energy ministers Vladimir Demchyshyn (Ukraine) and Alexander Novak (Russia).

“Once implemented the winter package will lay the ground for smooth gas deliveries from Russia to Ukraine, and consequently also through Ukraine to the European Union”, Sefcovic told journalists at a press conference in the European Commission's Berlaymont building in Brussels, after a short signing ceremony.

However, the trilateral gas agreement was only “initialled”.

“The document has not been signed”, noted Demchyshyn, adding that all three parties agreed a “specific procedure” will be required.

“The document will require further procedure to be signed … I am sure that we will be able to complete it shortly”, Demchyshyn said.

When asked what procedures specifically were needed before the agreement could go into force, Demchyshyn only said “this has been agreed between the parties and we will stick to it”.

According to the agreement, Ukraine commits to purchasing 2 billion cubic metres of Russian natural gas from state-owned company Gazprom, for a price of around $500 million.

“The Russian government commits to lowering the contractual price of natural gas to Ukraine in the fourth quarter of 2015, and in the first quarter of 2016, to a competitive level that is comparable with the prices offered to the neighbouring EU countries”, Sefcovic said.

“This discount ... should lower the price from the contractual $251 down to $232 [per thousand cubic metres]”, the Slovak commissioner added. He also said the commission would continue its “efforts towards mobilizing the necessary financial means” for Ukraine's gas purchases.

“I would like to clarify that the European Commission has played a facilitating role in this regard - not one of providing additional finance.”

Sefcovic praised the “cooperative spirit” of the parties, but despite being modeled after a similar gas deal made before last winter, the deal has been long in the making.

Over the summer, Sefcovic was much harsher on the two sides, venting his frustration with a lack of progress.

“The negotiation process has been difficult”, Russian minister Novak said. “We have convened a few times. But I must say that today all the prerequisites are there. We all hope that the commitments assumed will be fulfilled during this period.”

The deal comes amidst continued sour relations between Ukraine and Russia, which are fighting each other in a shadow war in eastern Ukraine, which killed almost 8,000 people.

Also on Friday, the Ukrainian government gave more details of its plan to ban Russian airlines from flying to Ukraine.

“Russian planes with the Russian tricolour have no business in Ukrainian airports”, Ukraine's prime minister Arseniy Yatsenyuk said.

The war has had a hefty toll on Ukraine's economy, and on Friday credit rating agency Standard & Poor's said the country's sovereign debt was in “selective default”.

Energy minister Demchyshyn said the gas deal will be “very supportive” in the government's effort to “restart” Ukraine's economy.