Group 38@Sophia EU hopeful of gas deal between Ukraine and Russia

_77847263_024071006-1

Guenther Oettinger gave a news conference after the talks

 

The EU’s energy commissioner is hopeful of a deal between Ukraine and Russia to end their dispute over gas deliveries after three-way talks in Berlin.

Guenther Oettinger outlined a plan which would see Russia supply Ukraine over the winter and into the spring.

Ukraine would pay Russia $2bn (£1.2bn) of its gas debt by the end of October and another $1.1bn by the year’s end.

The talks will continue next week. Russia halted supplies in June over Ukraine’s unpaid debts.

Relations had soured after the overthrow of Ukraine’s pro-Russian President, Viktor Yanukovych, in February and Russia’s subsequent support for separatists in Crimea and other Ukrainian regions.

‘Price at issue’

Friday’s talks came after Hungary cut its gas deliveries to Ukraine, arguing that it needed to stock up its reserves.

Hungary was criticised by the European Commission but argued that it could not risk being cut off by Russia before winter set in.

Europe's pipeline network

Mr Oettinger said the amount of gas delivered from Gazprom to Ukraine’s Naftogaz state gas firm was “undisputed” but the price was still “at issue”.

Under the EU plan, in return for the debt repayment, Gazprom would supply at least 5bn cubic metres of gas to Ukraine at $385 per 1,000 cubic metre, to be paid in advance.

“Now the price is being debated in court and no party will have an interest in damaging its legal position in front of the court,” the EU energy commissioner said.

Gazprom CEO Alexei Miller (C) and Russian Energy Minister Alexander Novak (L) leave the talks in Berlin, 26 SeptemberGazprom CEO Alexei Miller (C) and Russian Energy Minister Alexander Novak (L) leaving the talks in Berlin
Ukrainian Energy Minister Yuri Prodan in Berlin, 26 SeptemberUkrainian Energy Minister Yuri Prodan was at the talks

The parties at the talks on Friday still needed to consult with their governments, he added.

He said he expected the issue to be clarified early next week, after which he, ministers and CEOs would meet at the end of the week, again in the German capital.

Russia cut off all gas supplies to Ukraine after Kiev failed to settle its debt with Gazprom. Gazprom had sought $1.95bn out of a total claim of $4.5bn.

The Russian company said Ukraine had to pay upfront for its future supplies.

Hungarian cut

Russia says EU states are contractually forbidden from re-exporting gas to Ukraine but Brussels insists that such “reverse flows” are legal.

When Ukraine stopped receiving direct gas supplies from Russia in June, Russian exports to the rest of Europe were not affected, BBC World Service business correspondent Theo Leggett writes.

As a result Kiev has been able to obtain some supplies indirectly from Hungary, Poland and Slovakia, through pipelines normally used to send gas the other way.

Hungary’s Prime Minister, Viktor Orban, said on Friday: “Hungary cannot get into a situation in which, due to the Russian-Ukrainian conflict, it cannot access its required supply of energy,”

He added that Gazprom had agreed to supply his country with extra gas in order to fill its storage facilities ahead of the winter.

Mr Orban has been critical of EU sanctions on Russia and has maintained a closer relationship with Moscow than his western European neighbors.

Group 38@Sophia EU and Canada set out trade agreement

_76768744_2041758

The Canada-EU trade pact could boost trade by $20bn a year

The European Commission and Canada have unveiled the details of a new trade liberalisation agreement.

Under the deal almost all customs tariffs will be eliminated and markets for services will be opened up.

But the agreement still needs approval from the EU parliament and faces particular opposition from Germany.

Critics say the deal restricts the power of democratic governments in relation to big business.

Business benefits

It’s not just maple syrup. Traded products, in both directions, range from machinery, chemicals and transport equipment to services such as insurance and communications.

The European Commission has said the deal would boost bilateral tradeby 23%. And a A joint EU-Canadian study has put the combined annual economic gains at about 20bn euros although those figures were published six years ago.

However a provision included in the deal to bolster the rights of foreign investors, known as Investor State Dispute Settlement (ISDS) could still prevent the deal being approved.

Campaigners say it gives big business too much power in relation to democratically elected governments wishing to introduce new policies.

line

Analysis: economics correspondent, Andrew Walker

One thing could still derail the deal.

The Germans don’t like the proposal that’s included for a new system of tribunals, under what’s knows as ISDS. If foreign investors feel they’ve been mistreated they can turn to these tribunals and even in some cases apply for compensation.

ISDS has actually been around for years. But recently campaigners have begun to argue that it is undemocratic because of the constraints it puts on elected governments.

For example the tobacco company Philip Morris is taking legal action against Australia over its plain packaging laws – there has been no ruling yet on this case.

Other cases have involved regulation of energy prices, disputes over patents and alleged wrongful criminal prosecution.

The German economy minister Sigmar Gabriel has said he would reject the Canada deal if the ISDS elements remain.

That has cast new doubt on whether the deal will ever come into force and it suggests an uphill struggle for other trade negotiations still being hammered out behind the scenes.

line

Campaigners have called the ISDS “a powerful corporate weapon to delay, weaken and kill regulation.”

Nick Dearden, director for the World Development Movement says of the EU Canada deal: “If it is agreed, it will undermine the power of democratically elected governments to make decisions in the public interest”.

Supporters of ISDS say it provides foreign investors with protection against discriminatory treatment and that means they are more likely to take the plunge and invest.

The EU’s top trade official, Commissioner Karel de Gucht rejects the complaints against ISDS, although he has acknowledged concerns about some agreements.

He told the European Parliament: “On investment, the agreement establishes a system that sets a new standard for investor-to-state dispute settlement procedures”. He said the deal with Canada “directly addresses all the concerns that have emerged so far”.

The controversy about ISDS led the European Commission to launch apublic consultation earlier this year about its inclusion in trade liberalisation negotiations with the US.