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"Mr President, the Council would like to thank the European Parliament for placing this item on the agenda of its first part-session this year. You will probably agree with me that the Czech presidency displayed remarkable foresight when it placed security of energy supply as one of the cornerstones or priorities of our presidency this year. Let me give a brief synopsis of what has happened since the early morning of 1 January 2009 – New Year’s Day. On 1 January 2009, Russia announced it had stopped deliveries of gas to Ukraine, whilst keeping deliveries to the EU at full level. That same day, the Czech presidency and the Commission issued a statement calling on both sides to look for a prompt solution and honour their contractual obligations towards EU consumers. On 2 January 2009, as it became clear that deliveries to the EU were beginning to be affected, a formal declaration by the Czech presidency on behalf of the EU was issued and early in the morning on the same day in Prague, we received a Ukrainian delegation led by the Minister of Energy, Yuriy Prodan. This was made up of all parts of the Ukrainian political spectrum, such as the adviser to President Yushchenko, representatives of Naftogaz and the representative of the MFA. On 3 January 2009, we had a lunch in Prague with the Director of Gazexport Alexander Medvedev, and I personally took part in both meetings. Both meetings revealed a flagrant lack of transparency as regards contracts between Gazprom and Naftogaz and especially a lack of confidence which prevents progress in reaching an agreement. The stories given by both sides were totally different on certain issues, so that was the moment when we started to push the monitoring issue. In an effort to tackle this problem of divergent views, the idea of a joint fact-finding mission by the presidency and the Commission, led by the Czech Minister of Industry and Trade, Martin Říman, and by Matthias Ruete, the Director-General of DG TRAN, emerged, and it obtained the mandate to do this from an extraordinary COREPER I session, which we called on 5 January 2009, the first working day after the holidays. The mission went to Kiev. They also visited the dispatching centre and then the next day they travelled to Berlin to meet the Gazprom representative on 6 January 2009. Also on 6 January 2009, as the gas supplies were severely reduced to several EU Member States, leading to a major supply disruption, an extremely strong statement by the presidency and the Commission was issued, calling on both sides to immediately and unconditionally resume gas supplies to the EU. The presidency and the Commission then sought to accelerate the conclusion of a prompt political agreement between the Russian Federation and Ukraine so that gas supplies could be restored without further delay. Gas supplies were also the number one topic of the European Commission’s meeting with the Czech Government, traditionally the strategic session, which took place on 7 January 2009 in Prague and also dominated the first informal council which we organised in the Czech Republic – the general affairs informal meeting held in Prague last Thursday. Again, we were planning to discuss energy security in advance, but, of course, we had to react promptly and thus adopted a strong declaration by the presidency on behalf of the EU, which was approved by all. Following the complete standstill reached by gas supply transiting through Ukraine on 7 January 2009, with severe consequences for those Member States with little possibility to mitigate the cut, we stepped up pressure and after lengthy and difficulty negotiations got both sides to agree on sending a monitoring team composed of independent EU experts, accompanied by observers from both sides. This team was tasked with providing an independent monitoring of gas flow transiting through Ukraine to the EU and is deployed in both countries. Monitoring was defined by Russia as a precondition for the resumption of gas supplies. Deployment of this mission was not easy to achieve, as you probably observed. First, the resistance of the Ukrainians to include a Russian expert in the monitoring mission had to be overcome, then an annex added unilaterally by Ukraine to the agreement painfully brokered by our presidency was refused by Russia. After several trips by Prime Minister Topolánek to Kiev and Moscow and difficult negotiations with President Yushchenko and Prime Minister Tymoshenko and also Prime Minister Putin in Moscow, the agreement was eventually signed on 12 January and created a legal basis for the deployment of the monitors, and asked for the resumption of Russian gas supplies to the EU. Russia then announced that the supply would be resumed on 13 January at 08.00 in the morning, but then – I do not know whether it was 13 January – the progress did not take place as expected. On Monday 12 January we, the Czech presidency, convened a special Council of Energy Ministers in order to press for further transparency on transit-related issues, identify short-term mitigating measures to be taken until supplies are fully restored and identify medium- to long-term measures that are needed to prevent the consequences of such major disruption in future. The Council also adopted the conclusions reflected in document 5165 which urged both sides to resume gas deliveries to the EU immediately and to develop solutions that prevent recurrence. Furthermore, in these conclusions, Council agreed to urgently develop the strengthened medium- and long-term measures relating inter alia to transparency regarding the physical flow of gas, demand and storage volumes, regional or bilateral solidarity arrangements, to address the issue of missing energy infrastructure interconnections (which is a huge problem), to continue to diversify the transport route and sources, and to address the financing aspects of this, also by speeding up the revision of the Security of Gas Supply Directive. The European Union is undoubtedly facing a major gas supply disruption as a result of the dispute between the Russians and the Ukrainians and between the Gazprom and Naftogaz organisations. The extent of this supply cut now covers about 30% of the Community’s total gas imports. So this is a situation that not even the Cold War years have seen us exposed to – the total cut-off that we are facing today. A further meeting of the Gas Coordination Group on Monday 19 January now looks likely. The Energy Council, the TTE, will revisit the issue at its scheduled 19 February meeting through the conclusions it will adopt on the Commission’s Communication on the Second Strategic Energy Review. These conclusions and the Commission Communication will be discussed at the March European Council meeting which will no doubt devote adequate attention to the events of the past weeks. Allow me also to make a couple of final remarks in that introductory statement. First, the key objective of the presidency in the recent dispute has been an immediate resumption of gas supplies in the contracted amounts. The dispute is not over yet, as we all know. Therefore it is essential that the EU does not become entangled in the bilateral quarrels between Gazprom and Naftogaz. Second, both the presidency and the Commission keep urging both parties to dialogue in order to reach a compromise under which gas supplies to the EU could be restored. The failure to respect the agreement of 12 January by either Russia or the Ukraine would, in the view of the presidency and the Commission, be unacceptable. The conditions for the resumption of supply – as stipulated in the agreement – have been fulfilled and there is no reason therefore not to restore the supply fully. The presidency is well aware of the number of problems which persist. These need to be addressed, otherwise the insecurity concerning Russian gas via the Ukraine will linger on. First, there is this issue of the technical gas that the Ukraine needs to keep its transit system running. It is necessary that both sides reach a transparent agreement defining who is responsible for the technical gas supply and who pays for it. Second, it is crucial that the Russia-Ukraine contracts on gas prices and transit fees set clear and legally binding conditions preventing similar disruption from recurring. The presidency, together with the Commission, have repeatedly called on both sides to sign such a contract. However, neither we nor the Commission intend to intervene in the negotiations on the contractual conditions between the two commercial subjects. The presidency is also aware of the widely-shared consensus among the Member States that short-, medium- and long-term solutions be adopted without delay that would prevent similar situations from recurring in the future. Energy security is one of the top presidency priorities. The presidency has taken the lead in chairing the discussion on possible solutions for our energy dependency trap: be it the informal Council, as I mentioned, or the TTE-Energy session. Of the issues mentioned in the Energy Council Conclusions, I would like to mention the following. Firstly, the Member States agree that the creation of a functional and efficient solidarity mechanism is one of the cornerstones of future EU energy security. The Council and the Commission were aware of the potential problem. As you know, we faced a similar situation three years ago, in 2006, and this is more or less a recurring annual problem, as each year Russia increases the prices of the gas it exports to its neighbouring countries towards market levels. Therefore, we were extremely vigilant, in view of the Community’s large degree of dependence on Russian gas. Indeed, for some Member States, dependence on the gas supplied by Russia reaches about 100%. Secondly, solidarity presupposes interconnections of European energy networks, as well as improvements in energy infrastructure. Thirdly, increased gas storage capacity is crucial for the operability of the solidarity mechanism. Fourthly, in the light of the current crisis, the presidency also urges agreement on the review of the Directive concerning measures to safeguard the security of natural gas supplies by the end of 2009. Furthermore the EU needs to diversify its gas resources and supply routes. To this end, the presidency will organise the Southern Corridor Summit in May 2009, expecting tangible results as regards the diversification of resources and supply routes and as regards closer cooperation with the countries of the Southern Caucasus and Central Asia. EU energy security is not feasible unless internal energy security market is completed and functional. Therefore the presidency is looking forward to close cooperation with the European Parliament to compromise on the Third Energy Package at second reading. The presidency is also ready to continue discussions of the Second Strategic Review with the aim of reflecting its outcomes in the Spring Council Conclusions. Finally, in order to boost energy security the EU should strengthen the transparency mechanism and so on. I think the Community is prepared for the situation both politically and technically. Politically, the presidency, together with the Commission and other Member States, has invested, and will continue to invest, considerable effort in order to solve the situation. Technically, during these recent weeks, we have acted in accordance with the Directive concerning measures to safeguard the security of natural gas supply. This Directive established the Gas Coordination Group, which now proves its value. It requires Member States to prepare national emergency measures for this type of situation, sets minimum standards for the security of the gas supply to household consumers, and it prescribes that the Gas Coordination Group should ensure the Community coordination. This mechanism has had a considerable effect in mitigating the effects of the crisis. To give you an idea, gas from storage was used and sold to neighbouring countries and even to members of the Energy Community, alternative fuels were used for electricity production, gas production was increased – including from Algerian, Norwegian and other Russian sources – extra deliveries of gas were made to neighbouring countries. I would like to stress in particular the difficult situation of countries like Bulgaria or Slovakia. It also gives us an explanation as to why, for example, in the central and eastern European countries, this is problem number one – the people are freezing and it is on the front page of the newspapers. I know that in some other countries, which are not facing the problem with that kind of intensity, the situation is probably different, at least in PR terms. I stop here. I assure you that everything is being done, both at the political level and at the technical level, to incite the Ukrainian and Russian negotiators to re-install full contractual gas supplies to Europe and to minimise the negative consequences to our citizens and economies until that is the case. As you know, we are on the hotlines all day in Parliament because time is expiring and we need to have results. If we do not have results, it will inevitably have political consequences in our relations with both countries. This time, we already received a formal warning from the Russian side on 18 December 2008 through the EU-Russia early warning mechanism that a problem might occur if the ongoing negotiations between Ukraine and Russia did not result in an agreement on prices, transit fees and payment of the debts. So we were not that surprised by what has happened, but we were surprised by the magnitude and the intensity of the cut. Contacts, therefore, took place at the highest level prior to 1 January 2009 in order to avert the disruption of supply. The Czech presidency had been monitoring the situation well before the beginning of the year. I personally already met Russian officials in Prague two days before Christmas Eve. The Commission took adequate precautions in order to follow the development throughout the holiday period and shared its information with the Gas Coordination Group in early January. Both prior to and after 1 January 2009, the presidency and the Commission – working very closely with Andris Piebalgs – received assurances from both actors that gas deliveries to the EU would not be affected. As you know, the Czech presidency, together with the Commission and with the aid of some Member States, has been in contact with both the Ukrainians and the Russian gas companies and travelled several times in order to meet with both sides. In these contacts we have not sought to blame either side, or take sides, or even act as a mediator, since this is a commercial dispute. Rather, we have emphasised to both parties the gravity of the situation, stressing the fact that the credibility and dependability of Russia as a supplying country and of Ukraine as a transit country are both clearly damaged. As the gravity of the situation has increased, we have also acted as a ‘facilitator’ as far as deliveries of gas to the Community were concerned – a role that was very much appreciated by both parties, because they were not talking to each other at all."@en1
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