Ukraine keeps its gas pipelines out of Moscow's hands

By bne IntelliNews February 7, 2007

Roman Olearchyk in Kyiv -

Legislators in Ukraine, a major transit route for Russian gas and oil supplies to Europe, passed a law Wednesday locking the country's vast gas pipeline transportation system under state control.

The law will hearten Western policymakers, as it erects a major barrier to Moscow's ambitions for gaining control of the country's prized pipelines, responsible for pumping most of Russian and Central Asian gas to Europe. Russia's Gazprom is actively seeking control over pipelines in transit countries including Ukraine, whose vast pipeline system, said to be the second largest in the world after Russa's own, is considered the biggest prize.

The PM caves

The legislation was passed amid growing fears in Kyiv that the governing coalition led by the ostensibly pro-Russian Prime Minister Viktor Yanukovych had offered Moscow a stake in the pipeline in return for hydrocarbon production assets on Russian turf.

The law, championed by fiery opposition leader Yulia Tymoshenko, backs up previous legislation designed to ban privatisation and concession deals that would yield foreign entities an interest in the pipeline system. It was passed as a knee-jerk reaction to comments made recently by Russian President Vladimir Putin, who during a three-hour press conference on February 1 said Ukrainian officials had made a proposal of "revolutionary character," offering an interest in their pipelines in return for production rights in Russia.

PM Yanukovych, who in recent months has wrested authority on foreign and domestic policy away from Ukraine's pro-Western president, Viktor Yushchenko, had dissembled when questioned about the proposal unveiled by Putin.

"I think it has a future. If we speak about combining assets, this should be done on equal terms," he said last week.

But Yanukovych backtracked after mounting protests from critics accusing him of engaging in backroom deals that would strip a strategic asset from state control. This week, he pledged to keep the pipeline in state hands, while Russia would be offered a stake in a yet-to-be built pipeline intended to boost Russian gas transit across Ukraine.

Lawmakers backing Yanukovych eventually supported the law after Tymoshenko's faction threatened to block parliamentary sessions.

The legislation, however, is expected to pose a challenge to often erratic relations between Kyiv and Moscow. Relations between the two countries have been strained since protests against election fraud in 2004 propelled Yushchenko into the presidency over Yanukovych, the Kremlin-backed candidate. Bilateral relations sunk to a new low in 2006 when a gas price dispute triggered supply shortages to Europe.

Relations had improved somewhat since Yanukovich last summer reclaimed the job of prime minister, a post he held before the Orange Revolution.

Send comments to Roman Olearchyk

Related Articles

Drum rolls in the great disappearing act of Russia's banks

Jason Corcoran in Moscow - Russian banks are disappearing at the fastest rate ever as the country's deepening recession makes it easier for the central bank to expose money laundering, dodgy lending ... more

Kremlin: No evidence in Olympic doping allegations against Russia

bne IntelliNews - The Kremlin supported by national sports authorities has brushed aside "groundless" allegations of a mass doping scam involving Russian athletes after the World Anti-Doping Agency ... more

PROFILE: Day of reckoning comes for eccentric owner of Russian bank Uralsib

Jason Corcoran in Moscow - Revelations and mysticism may have been the stock-in-trade of Nikolai Tsvetkov’s management style, but ultimately they didn’t help him to hold on to his ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.