Oleksandr Narbut, Independent Expert, Ukraine

I would like to keep on with Mikhail’s reasoning logics. I think the organizers did the right thing having planned discussing of the most complicated issues at the end of the Forum. Previous speakers talked much about the situation in Russian monopoly. From my point of view, we can find the balance if we start from the end. From downstream to upstream, as the main unbalance lies in the upstream area.

From one side, there is a giant monopoly trying to monopolize not only resources but also transit capacities including gas supplies to ultimate consumers. It manipulates also with gas volumes sold on the European market and consequently stimulates the price increase. From the other side, we can talk about Gasprom’s activities in the Caspian basin. It was not pure accident that the interstate agreement Azerbaijan-Russia-Armenia on the Nagornyi Kharabakh issue was recently signed in the region. That is a key to Azerbaijan hydrocarbon energy resources, to Odesa-Brody oil pipeline system and other essential aspects of the Caspian oil and gas production issue.

As long as European companies and politicians are not aware of the importance of consolidated actions within the framework of the new European Energy Transit Space initiative, it will be difficult to talk about possible balance of relations. That is one side. From the other side, it seems to me that Mikhail is right talking about that elegant formula where the transit constituents play the key role. The transit components are not just the link that is important for consumers and for producers; it is the link which by being transformed into real profitable business makes it possible to diversify not only transport routes but also energy supply sources.
In this context it is important to what extent energy transit components of different countries are transformed to integrated system. The deeper the integration will be, the easier the disintegration process of companies, big European energy concerns will be (into output, trade and transit components). In this respect the period of global economic turbulence that we currently entered into may even act in our favor.

In fact, there were few chances for balancing the relations before the crisis. I should rather name those chances as hypothetical. In other words, during the capitalization growth period, when Gasprom’s aim was to reach the fantastic point of $1 trillion, when producer dominated over consumer, it was practically impossible.

Coming back to the discussion of what would happen if Gasprom cut its gas supply to Europe for a couple of days, and, accordingly, would not receive the export revenues, we understand that losing contact with the first-rate European consumer would bring down the Gasprom’s ratings to the extent that Gasprom would never dream again about the $1 trillion. As a result, Gasprom’s solvency and investment potential would be weakened even more.

Today, when investment payout is particularly important, Europe has a chance to pay more attention to the Energy Charter as a perspective instrument. We need to do that in order to ascertain ourselves once again, that it is not so bad, and that we should not adapt it in accordance with Russia’s wishes. More attention has to be paid to the transit states such as Ukraine, Belarus, and assistance should be provided to them to modernize market energy relations within these states, transforming their transit component into real business.

Everything that happened in Ukraine and Belarus after gaining independence is systemic degradation of gas transit system under the aegis of reduction of prices for Russia’s gas supplies to Europe. That is gas price competitiveness on European market up to its remote borders – Portugal, Great Britain, France, and Italy and so on.

Thus, the new European Energy Transit Initiative could be supported both by European Parliament and by the leaders of the so-called old European states. And the new European states should be interested more than anybody else in implementation of this Initiative. From my point of view, our calls for establishing common transit space should be understood and supported to more extent by the united Europe.

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