Former energy minister, economist Yuriy Vitrenko heads Naftogaz, the national gas company 100% owned by the Ukrainian state. While in Paris for a few hours, he met L’Express during an interview in which he particularly denounced the German project for a Russian gas pipeline Nord Stream 2. At the heart of the current problem, the start-up of this gas pipeline is today blocked by the international community because of Vladimir Putin’s threats of invasion of Ukraine.
L’Express: Why are you opposed to the commissioning of the Nord Stream 2 gas pipeline, almost completed and planned to link Russia to Germany across the Baltic Sea?
Yuriy Vitrenko: Because it would allow Vladimir Putin to divert all gas deliveries that currently pass through Ukraine to this pipeline. This would leave the field free for him to invade Ukraine without any significant reaction from the Europeans who would say to Ukraine: “Sorry, that’s too bad for you, but here’s the new reality and we can’t do much anymore. something to help you.” Under these circumstances, Putin could affirm that he is honoring his delivery contracts to Europe, while European leaders would find it very difficult to take sanctions against Russia by giving up Nord Stream 2, which has already been put into service. Because, assuming that European politicians decide to do so, it is to them (and not to Putin) that their public opinion would turn to hold them accountable.
Infographics
The Express
The Europeans would ask their leaders to explain why it is cold in their country and why they recklessly decided to deprive them of gas in order to punish Putin. The latter would come out unscathed. This is why continuing to send Russian gas through Ukraine seems to us to be the best way to dissuade the Russians from invading Ukraine. Don’t get me wrong: we’re not asking for pity or special treatment. What we just want is that Nord Stream 2 does not go live as long as Russia does not respect international trade rules.
But Putin uses the gas tap as a political weapon. Right now, for example, it is blocking supplies from Central Asia based on specific goals and interests. This artificially raises consumer prices in France and Europe. Things should not work like this: Russia should not be above the law.
You recently called the Russian president a “bully” (“bully” in English). Why ?
Because it is so. He uses the weapon of intimidation whenever he can. I witnessed it: in 2019, in Paris, I found myself face to face with him during a negotiation on the extension of the gas transit contract through Ukraine (contract which was coming to an end). The other topic of discussion was the unpaid $3 billion he owed us following an arbitration between our two countries, decided in our favor by an arbitration tribunal in Stockholm, Sweden.
In the room were, for the Russian side, Vladimir Putin and Gazprom boss Alexey Miller, and, for the Ukrainian side, President Volodymyr Zelensky and myself, as executive director of Naftogaz. Note that it was Putin himself who was negotiating with me, and not Miller who is the general director of Gazprom. On the Ukrainian side, on the other hand, President Zelensky let me lead the discussion. I therefore negotiated directly with Putin, who is closely interested in the gas business, of which he knows all the details.
Russian President Vladimir Putin during a videoconference meeting with Gazprom CEO Alexei Miller, in Moscow on January 19, 2021.
afp.com/Alexey NIKOLSKY
Anyway, with him it’s not about negotiating like we do with other CEOs as I have practiced all over the world. Because Putin does not seek to create a climate of trust where he and his partner would both have something to gain. On the contrary, he is an intimidator. He sets up a balance of power to impose his ascendancy by scaring his interlocutor(s).
“The Nord Stream 2 gas pipeline looks like a corrupt operation”
Basically, he says: “Here, I have in my possession such a gun and such a gun, and then don’t forget that I also have such and such another gun…” You have to stand up to him and show him that the we are not afraid of him. This is what we did by retorting: “We too have such a weapon and such a weapon”. These were, of course, economic weapons. So he said, “OK, let’s have a truce.” This is how it works. It’s “KGB style”…
Can Europe do without Nord Stream 2?
Absolutely. The capacity of our gas pipeline is 130 billion cubic meters per year. But we only use 40. Which means that our remaining capacity is 90 billion. The capacity of the Nord Stream 2 is 55 billion cubic meters. That is to say significantly less than our unused capacity.
The Ukrainian Naftogaz refinery near Kharkiv on August 5, 2014
afp.com/Sergey Bobok
Why does Germany have so heldin your opinion, to build this gas pipeline which connects it to Russia?
The first explanation is related to something akin to corruption. I’m not saying it’s corruption, but it looks like it. Thus, within the framework of the financing of the Nord Stream 2 project, Gazprom borrowed money from several European partner companies at the exorbitant rates of 7%, 9% or 10%. But it could easily have borrowed from banks at the rate, more advantageous for it, of 2% or 3%. These companies, which have done very well, are called Wintershall holding GMBH, a subsidiary of BASF (Germany), OMV Group (Austria), Engie (France) and Shell (United Kingdom, Netherlands). At this hyper-advantageous rate, we can consider that Gazprom made them an offer that they could not refuse…
The second reason is geopolitical. It is based on the old idea, wrong in my opinion, that Germany has an interest in getting closer economically to Russia to strengthen its position vis-à-vis France or the United States. Doing business with Russia is not questionable in itself. Still it is necessary that it plays according to the rules of the game accepted by all. But Russia behaves like a great power that doesn’t just expect respect; she wants us to obey her. Alas, some French politicians imagine, like some Germans, that Russia is a modern state like any other. I assure you that is not the case. Russian leaders live in another universe, governed by a very distinct logic.
Can Vladimir Putin turn off the gas tap to Europe?
No, because gas contracts are negotiated over the long term, over twenty, thirty or forty years. If Gazprom ceased deliveries, it would be subject to substantial fines. On the other hand, it would lose all credibility on the European market and could not hope to continue to sell gas there in future years. Besides, Russia is not North Korea and Putin is not Kim Jong-un. He does not want his country to be isolated. As a “tough guy” and “bully”, he wants to sit around the table with the other leaders and be seen as the boss there. If Russia stopped delivering gas, the damage would be terrible for her. Economically and in terms of reputation.
Can Russia decide to sell China the gas it currently supplies to Europe?
Look at a map of the world: China is located very far from the gas fields that supply the Old Continent. To reach Beijing, gigantic pipelines would have to be built, which would take years and be extremely expensive. Also Russia would not want to find itself in a situation of total dependence vis-à-vis China, which it already supplies with its gas from Siberia. The far-fetched hypothesis of a pivot to Asia is a bluff.
Yes a Russian invasion happened in Ukraine, cow would you consider things?
It would be a very ugly, very dirty war. Ukraine is a very large country, with 40 million inhabitants, with an army equipped with tanks and anti-tank weapons. And many civilians are ready to fight, gun in hand. For the Russians, it would be anything but a walk in the park. I don’t believe in an imminent war. What Putin wants is to weaken Ukraine in all sorts of ways so that it becomes easy prey. Hence its hybrid war which mixes propaganda, destabilization, economic pressures, energy war, military maneuvers, cyberattacks, etc.
What Putin is looking for is to scare off investors and cause capital flight that would weaken Ukraine and lead to social instability. That’s why Emmanuel Macron’s €1.2 billion aid package last week in the form of guarantees to help economic development is so shrewd. And so precious. This aid is aimed precisely at ensuring that Ukraine does not waver. Through his initiatives, the French president is in the process of taking leadership in Europe… at a time when Germany’s position on Ukraine appears strange to many.
How do you measure the impact of the crisis since annexation of Crimea 2014 ?
It is very difficult to succeed as a country when a neighboring country is occupying part of it and waging permanent hybrid warfare. But we adapt. In 2014, for example, Russia stopped supplying us with gas. At that time, we were very dependent on this gas, which represented two thirds of our consumption. We had to find other suppliers and build new pipelines. Our main supplier today is the Norwegian Statoil. Russia also tried to kill us economically by claiming the mad sum of $100 million from us. But this dispute was settled to our advantage during the arbitration in Stockholm, which I mentioned earlier when referring to my negotiation with Putin.
In addition, the Ukrainians had to reduce their gas consumption. We have divided our imports by three! How? ‘Or’ What ? By reducing our consumption thanks to an increase in tariffs, which enabled us to align ourselves with European tariffs. In the past, the price of gas in Ukraine was fifteen times lower than elsewhere in Europe. The increased bill has been painful for Ukrainian consumers. But it had to go through that because people had gotten used to doing anything. For example, they lived at home in a T-shirt in winter, leaving the window wide open when it was minus 10 degrees outside!
The break with Moscow had another positive aspect: it forced us to modernize Naftogaz in order to be able to enter the European market and do business with all the major companies in the sector that play by economic rules that they respect. When Naftogaz limited itself to doing business with Russia, it is undeniable that the Ukrainian company was a “black hole”, an opaque company where corruption reigned. This page is behind us.