ANALYSIS: Polish-Norwegian gas deal offers relief to Ukraine (09/23/01)

ANALYSIS

Polish-Norwegian gas deal offers relief to Ukraine

by Michael Lelyveld
RFE/RL Poland, Belarus and Ukraine Report

A deal reached on August 29 between Poland and Norway could spell the end of Russia's long campaign to pressure Ukraine over its pipelines that transport Russian natural gas.

The "Financial Times" reported that Norway's agreement to sell 74 billion cubic meters of gas to Poland over a 16-year period will reduce Warsaw's dependence on Russia for fuel supplies. Under the agreement, the deliveries by Norway's Statoil to the Polish Oil and Gas Company will start in 2008 and rise quickly to 5 billion cubic meters annually through 2024. Although the amount seems relatively small, Poland consumed only about 11 billion cubic meters of gas last year. Over 60 percent of that amount was imported from Russia.

The deal is important because of the three-way tensions that have been building among Russia, Poland and Ukraine over Kyiv's use of Russian gas and Moscow's attempts to solve the problem.

Some 90 percent of Russia's gas exports to Europe run through the former Soviet pipelines in Ukraine. But Russia has frequently accused Ukraine of illicitly tapping gas. Ukraine also owes an estimated $1.3 billion for past Russian supplies.

In July 2000, Russia announced it would try to build a bypass line through Poland and Slovakia to reduce its reliance on Ukraine and eventually double its energy exports to the European Union.

But getting Poland's consent has been problematic. Although Warsaw sent mixed signals, it ultimately was unwilling to take part in a plan that would undercut Ukraine.

The agreement with Norway, which has been debated for months, may help Poland in at least two ways. It limits Moscow's power to pressure Warsaw over its stand on the bypass by ending its role as the monopoly supplier. It may also satisfy a European Union directive on diversifying energy sources, which may aid Poland's drive to join the EU.

On the downside, Poland will pay more for Norwegian gas, which will require a new pipeline to be built across the Baltic Sea. Poland's neighbor Germany may also be displeased, since Germany's Ruhrgas is a shareholder in Russia's Gazprom and a partner in studying the bypass plan.

While the results may be mixed, the effects of the pending deal have been notable in recent weeks.

After more than a year of friction, Russia and Ukraine are close to an agreement on rescheduling Kyiv's gas debts on terms that could give Ukraine as much as a decade to pay.

Upon taking office in May, Ukrainian Prime Minister Anatolii Kinakh took a tougher position than his predecessor, Viktor Yuschenko, on countering Moscow's demands that Kyiv convert the arrears of its power sector into sovereign debt. Ukraine has also fought off Russian proposals to control the transit lines.

A compromise may be found, but it also seems likely that Ukraine's harder line has been the result of a sense that Russia's bypass plan would fail.

At a meeting to mark Ukraine's 10th anniversary of independence, Russian President Vladimir Putin again raised the pipeline issue with Polish President Aleksander Kwasniewski, according to Reuters. But there were no reports that Mr. Kwasniewski agreed to the bypass plan.

Michael Lelyveld is an RFE/RL correspondent.

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