Russia-Ukraine gas dispute: Secretary General appeals for conciliation efforts
Despite attempts to gradually resume Russian gas deliveries through Ukraine on 13 January 2009, there is no transit of Russian gas through Ukraine. The Secretary General reemphasised today his appeal to all parties involved to focus their efforts on restoring full operation of gas transit via Ukraine independent of finding solutions to pending commercial disputes. He welcomes the preparedness of Mr. George Verberg, former CEO of Gasunie and former President of the IGU, to lead conciliation efforts in line with the Energy Charter Treaty or in any framework acceptable to the Parties.
In this context, the Secretary General would also like to draw attention to the following comment by Mr. Verberg:
"The operational challenges on the Russian and Ukrainian gas transportation system due to the cease of Russian gas deliveries on to Ukraine on 1 January and the total loss of the Russian transit volumes in the course of 6-7 January - i.e. within a week - are of an unprecedented magnitude. Both volumes together exceed the total of the present Dutch and Norwegian gas production. Putting the system back into operation for the flow of the undisputed gas transit volumes of more than 270 Million m3/day is an unprecedented undertaking. This will require that all parties involved take a time out on all non-operational disputes in order to focus on restarting the transit operation. This will especially require detailed advance coordination between all dispatching centres involved on all major details of such operation and continuous communication about their implementation. Even then, problems during the run up of the system cannot be excluded and the public should have a realistic view that the overall operation is likely to take several days."
Statement of the Secretary General on the recent developments in the Russia-Ukraine gas dispute
Following the recent developments in the Russia-Ukraine gas dispute, André Mernier, Secretary General of the Energy Charter Secretariat, issued the following statement today, 9 January 2009:
Since 7 January 2009, no Russian gas is flowing at the entry and exit points of the Ukrainian system. For the first time in history, the Ukrainian gas transportation system, which is the largest gas transit system worldwide, is not providing any transit.
It is worth reiterating that the principle of uninterrupted transit is one of the core principles of the Energy Charter. While Article 7(5) of the Energy Charter Treaty specifically requires member countries to "...secure established flows of Energy Materials and Products to, from or between the Areas of other contracting Parties"; Article 16 of the draft Transit Protocol requires each member state to take necessary measures "...to expeditiously restore the normal operation of such Transit" in case of interruption, reduction or stoppage of transit flows.*
The Secretary General urges all parties involved to focus their efforts on restoring full operation of gas transit via Ukraine and a speedy resumption of the established gas transit flows. In doing so, all parties involved should further ensure the necessary communication and cooperation between the system operators involved to restore the system. Furthermore, the parties involved should prevent the disputes of national or international contractual and legal claims to be a hindrance for dealing with issues of vital importance and settle these disputes at the appropriate time.
Regarding the disputed transit issues, the Secretariat invites the parties involved to consider the conciliation procedure according to Article 7(7) of the Energy Charter Treaty, which provides a forum to look for solutions of these issues between the parties to the dispute. The Secretary General has found the former President of the International Gas Union, George Verberg, also former CEO of the Dutch gas company Gasunie, available to lead such conciliation efforts.
* This provision is not disputed in the latest official version of the draft Transit Protocol (CC 251).
Secretary General issues statement on Russia-Ukraine gas dispute
Today André Mernier, Secretary General of the Energy Charter Secretariat, issued the following statement, recalling the principles of the Energy Charter Treaty on uninterrupted transit of energy:
Present negotiations on the settlement of outstanding payment for Russian gas sold to Ukraine have not yet been resolved. The dispute relates to a supply contract and is a commercial matter. Although in these uncertain circumstances, it is important to recall the principle of uninterrupted transit which is a core element of the Energy Charter Treaty: Article 7(5) of the Treaty obliges its member countries to "...secure established flows of Energy Materials and Products to, from or between the Areas of other contracting Parties." A core element of this principle is to prevent non-transit related issues from having a negative impact on transit volumes.
- In principle, in order to avoid the interruption of transit volumes it is important to ensure that gas volumes in transit and supply volumes, or domestic volumes within the transit country, can be and are handled separately. Where the design of the transportation system does not allow for the physical separation of the various gas streams, the establishment of a transparent volume allocation system is necessary to ensure that volumes nominated for transit can be traced through the system to ensure the delivery of unrestricted volumes to the respective customers downstream of the transit country.
- In the case of a transit dispute, the Energy Charter Secretariat stands ready to support the work of an independent conciliator, as foreseen in Article 7 of the ECT, should the parties call for it.