July 17, 2018 / 2:52 PM / 5 months ago

German minister optimistic after fledgling Ukraine-Russia gas talks

* Talks to lay ground for new gas transit deal

* Ukraine sees gas transit as guarantor of its independence

* Very little concrete emerged from initial talks

BERLIN, July 17 (Reuters) - German Economy Minister Peter Altmaier said he was optimistic that Russian gas would continue to reach Europe via Ukraine in future after he hosted talks between top officials from the two countries aimed at laying the ground for a new transit contract.

With Russia embroiled in conflict over breakaway regions in Ukraine’s east and the European Union reliant on Russian gas to fuel its industries, the future of gas transit - seen by Kiev as a crucial guarantor of its independence from Moscow - is the object of intricate diplomacy.

“We expect there to be difficult discussions, but it is possible to find solutions that the security interests of Ukraine can be justified long after 2020 and substantial gas transit via Ukraine to Europe will continue,” Altmaier said.

He and European Union energy commissioner Maros Sefcovic hosted the meeting between Russian Energy Minister Aleksandr Novak and Ukrainian Foreign Minister Pavel Klimkin that was intended to lead to further meetings.

But, highlighting the gulf dividing the parties, very little emerged from the first round of meetings on Tuesday afternoon, with Altmaier and Sefcovic only hoping that they could obtain the two countries’ agreement to further discussions.

Ukraine, a sovereign state that was once ruled from Moscow as part of the Soviet Union, believes its role in transmitting Russian gas gives it crucial leverage, helping it guarantee its sovereignty in the face of Russia’s annexation of the Crimean peninsula and backing for separatists in the East.

But Sefkovic said parties were far from agreeing on how much gas Russia would continue to send via Ukraine.

“We will not go into concrete figures today because we want to set the parameters of the discussions, their sequencing and the frequency of these meetings,” he said, adding that he wanted to see “substantial volumes which would guarantee commercially viable transit” from 2020 onwards.

He was optimistic that further meetings could be scheduled from September.

Ukraine’s transit role is also imperiled by the planned Nord Stream 2 pipeline which would directly link Russia with Germany via the Baltic Sea, bypassing Ukraine - but Altmaier said this topic had not been raised, and that rising gas demand meant Ukrainian transit would be needed regardless.

Falling gas production in the Netherlands and depleted reserves, as well as the need to switch from coal to lower-carbon fuels meant that Europe’s consumption would continue rising, he said. (Reporting by Thomas Escritt; editing by Emelia Sithole-Matarise)

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