Ever since Viktor Yanukovych’s victory at the recent election, it has been expected that Kyiv and Moscow would put gas cooperation high on their agenda. Although there was surprise that the matter was not discussed during Yanukovych’s recent visit to Russia, Premier Mykola Azarov confirmed on 19 March that a high-level delegation will visit Moscow this week to discuss gas. He said one of the aims is to review gas contracts.

Yanukovych’s recent proposal to set up a trilateral consortium involving Russia and the EU to run and upgrade Ukraine’s gas transport system caused a stir. Some saw it as an attempt to torpedo the South Stream project, the main rival to Ukraine’s gas transport system, even though completion is a long way off. The project aims to build a pipe to take Russian gas under the Black Sea to Europe, bypassing Ukraine.

However, it seems Ukraine is serious about the consortium. First Deputy Prime Minister Andriy Klyuyev confirmed on 19 March that Ukraine plans to grant a concession on the use of the transport system after a gas transport consortium is formed. He noted that a draft bill is almost ready and that the pipeline would remain in state ownership. Current legislation bans its transfer into foreign ownership. Klyuyev noted the need to raise Ukraine’s attractiveness as a transit country, otherwise after the construction of the Nord Stream and South Stream pipes, “our gas transport system will not be needed by either EU states or Russia”.

The day before Deputy Prime Minister Serhiy Tihipko stressed that during the talks Ukraine could avoid making political compromises with Russia in exchange for a compromise on the price of gas. “We have a transit price and we should not make any political or property concessions,” Tihipko stressed. And that is the key point. Though Yanukovych won tactical points recently by suggesting that Russian gas transit to Europe via Ukraine be doubled, thereby making the pricey South Stream project almost economically pointless, Ukraine needs to tread a fine line. It must ensure that any short-term advantages attained are not outweighed by long-term political or economic disadvantages. After all, we still have the spectre of the long-term gas deal struck in 2009 between counterparts Putin and Tymoshenko which raised the price paid by Ukraine. The Kremlin has since warned Kyiv against attempts to revise the deal.