Russian-German-Ukrainian Gas Consortium Idea Revived.

Naftogaz’s new chairman, Olexander Bolkisev, said yesterday that Ukraine should consider the old idea of establishing a Russian-German-Ukrainian consortium to manage Ukraine’s pipelines. He said the consortium could eliminate the need for RosUkrEnergo to be involved and that he and the energy minister, Ivan Plachkov, had discussed the idea last week with the management of Gazprom. Vladimir Nesterenko: The consortium idea is an old one that was proposed with much fanfare and then quietly shelved by the former president, Leonid Kuchma. Kuchma instead implemented a 50-50 joint venture between Naftogaz and Gazprom that was supposed to build and operate new additions to Ukraine’s pipeline network, but the JV has been practically inactive. Whether the idea of giving the consortium management control of Ukraine’s existing pipeline network can be revived depends on politics: a pro-Russian government would be more likely to give Gazprom partial management control in return for a suspension of gas price increases. However, the benefits would be short-lived, as Gazprom would continue to seek ownership of the pipelines and thus would eventually renew its price pressure.