Nearing a gas deal

October 21, 2014

A pressure meter and gas pipes are pictured at Oparivske gas underground storage in Lviv region

Russian and Ukrainian energy ministers are due to meet European Energy Commissioner Guenther Oettinger in Brussels after presidents Petro Poroshenko and Vladimir Putin said they had agreed on the “basic parameters” of a deal to get gas flowing to Ukraine again this winter.

Russia cut off gas supply to Ukraine in mid-June following more than two years of dispute on the price and said Kiev had to pay off large debts for previously-supplied gas before it would resume supply.

Putin also threatened to cut gas supplies to Europe if Ukraine steals from the transit pipeline to cover its own needs this winter. Any interruption to flows to western Europe, via Ukraine from Russia, would deal another blow to already struggling EU economies.

The two sides still differ over how to calculate Kiev’s huge gas debt and the schedule for payments and Poroshenko has already said Ukraine will need help to pay the bill.

After the United States air-dropped arms to Kurdish fighters defending the Syrian border town of Kobani against Islamic State militants, Turkey said it would allow Iraqi Kurdish fighters to reinforce. Ankara will facilitate the passage of peshmerga forces, who are already fighting IS in Iraq.

That marks something of a shift. Turkey’s refusal to intervene in the fight with Islamic State has frustrated the United States and sparked lethal riots in southeastern Turkey by Kurds furious at the refusal to help Kobani or open a land corridor for volunteer fighters and reinforcements to get there.

Iran is pushing what it portrays as a new compromise proposal in nuclear talks, but Western negotiators say it offers no viable concessions, underscoring how far apart the two sides are as a Nov. 24 deadline nears.

Tehran says it is no longer demanding a total end to economic sanctions in return for curbing their nuclear program and would accept initially lifting just the latest, most damaging, sanctions. Western officials dismiss the proposal as nothing new and say the Iranians have always known that the sanctions could only end gradually.

China posted its slowest growth – 7.3 percent year-on-year in the third quarter – since the 2008/2009 financial crisis, adding to concerns about flagging global growth but also reinforcing expectations that Beijing will produced more stimulus to buoy the economy.

That has taken the steam out of a mini Asian share rally following last week’s global sell-off. European shares are expected to dip, amplifying modest losses on Monday.

Ebola will inevitably cast a shadow over an African investment summit in London, to be opened by David Cameron, and featuring the presidents of Ghana, Tanzania, Rwanda, Uganda and Togo.

The deadly virus is ravaging three west African countries out of the 50 or so in sub-Saharan Africa. But the headlines and hysteria risk damaging the investment climate for all of them.

Under pressure from eurosceptics in his own party and a surge in support for the anti-EU UKIP, Cameron risks getting boxed in by promising to curb immigration from within the European Union.

That runs totally counter to EU law and is highly unlikely to be accepted by other countries in the bloc, a fact Cameron was reminded of yesterday by an unusual alliance of outgoing European Commission President Jose Manuel Barroso, his own deputy prime minister and UKIP leader Nigel Farage.

There is also the fact that in treading this path, Cameron is alienating natural allies within the EU such as Poland and the irony that one thing Britain really wants is to complete and EU solidify the single market, of which freedom of movement is a central plank.

Cameron has said he will outline his position on immigration by Christmas having hitherto been coy about his aims for renegotiating Britain’s relationship with the EU for fear that they will be dismissed by his own party and others as too timid.

Has the prime minister just taken Britain another small step towards the EU exit door? Barroso said a Britain outside the EU risked being internationally irrelevant.

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