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Eastern Europe Bashes West As Putin Gas Link Plan Splits EU

Ladka Bauerova and Radoslav Tomek, Bloomberg New

Eastern European nations set to lose billions of dollars in natural gas transit fees are lambasting western Europe for striking another pipeline deal with Russia that will circumvent Ukraine.

The prime ministers of Slovakia and Ukraine criticized an agreement between western European companies from Germany’s EON to Paris-based Engie with Russian pipeline gas export monopoly Gazprom PJSC to expand a Baltic Sea link. Western European leaders and companies are “betraying” their eastern neighbors, Slovakia’s Robert Fico said after meeting Ukraine’s Arseniy Yatsenyuk in the Slovak capital of Bratislava on Thursday.

Gazprom and EON, Engie, Royal Dutch Shell, OMV and BASF signed an agreement last week to expand Nord Stream by 55 billion cubic meters a year, which would double its capacity to almost 30 percent of current EU demand. Ukraine, already struggling to avoid a default amid a conflict with Moscow-backed separatists in its east, is set to lose $2 billion a year in transit fees while Slovakia would lose hundreds of millions of euros, the leaders said.

“They are making idiots of us,” Fico said. “You can’t talk for months about how to stabilize the situation and then take a decision that puts Ukraine and Slovakia into an unenviable situation.”

Russia is trying to cut how much gas it ships via Ukraine’s Soviet-era pipelines as international courts arbitrate in pricing disputes between the nations, echoing spats that caused supplies to Europe to halt several times during the past decade. Russia currently ships about a third of its Europe-bound gas via Ukraine, down from about two-thirds in 2011, when the Nord Stream pipeline under the Baltic Sea started supplying Germany directly.

Nord Stream-2 is set to start deliveries to Europe in 2019, when the current agreement between Russia and Ukraine on gas transit ends.

The project completely neglects Polish interests and hurts the EU’s unity in the face of Russian President Vladimir Putin’s “aggression” in Ukraine, Polish President Andrzej Duda said on Wednesday. Ukraine’s Yatsenyuk called the project “anti- Ukrainian and anti-European” on Thursday.

This year Ukraine expects Russia to ship as much as 60 billion cubic meters of gas through its territory, which represents about $1.8 billion of transit revenue, Energy Minister Volodymyr Demchyshyn said on Friday. The two countries reached an agreement on Friday on gas prices for the coming winter.

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