My name is Ed Chao, and I'm a senior fellow at the Energy and National Security Program here at CSIS. We sure know how to pick out timing, because we're knowing that Alan Riley was going to come, and he was with us a couple of years ago to talk about the then pending, among other things, the then pending EU investigation of Gazprom's anti-competitive practices. I don't know if you caught today's, this afternoon's financial times, but it was reported that the competition commissioner will issue the statement of objections against Gazprom this Wednesday, or the day after tomorrow. Those of you who read the FT might have seen an article that Alan wrote last week, or came out last week under a Google case, and where he talked about, among other things, the inclination for the commission to go for court decisions rather than settlement of anti-competition cases. It's interesting to watch the long delayed now, we've been waiting a year for the statement of objections against Gazprom, what this coming Wednesday, if the reports are correct, will bring. In any case, it is my distinct pleasure to welcome back to CSIS, Professor Alan Riley from the City University of London here with us, and I think given today's news, we might start with the Gazprom case, but we're also going to cover the subject of Ukraine. It goes without saying that Ukraine is facing its greatest crises and challenges since independence more than 25, almost 25 years ago now, foremost in security, given the annexation of Crimea by Russia and the ongoing hostility in Donbass. The real prospect of financial and economic collapse stemming not just from the current crisis, but from more than 20 years of neglect and malfeasance by Ukrainian political leaders. Many societal challenges such as widespread corruption and poverty, extreme income disparity and other social ills. Some has called energy corruption the original sin of modern Ukrainian statehood. Billions of dollars have been siphoned off every year from the Ukrainian energy sector. A country that used to export gas to Russia as recently as the 1970s is dependent on gas imports. The country's abundant energy resources have been hijacked for private gain, and Ukraine is left with the most energy inefficient economy in Europe, a population which is underserved when it comes to energy services. Ukraine's energy and security also impacts Europe since its pipelines still transit 40 to 50 percent of Russia's gas exports to Europe depending on whether it's a high demand or low demand year party dependent on weather. There are no ready substitutes for this Ukrainian transit in the next, say, five years in spite of Russian decorations to the contrary. When it comes to energy reform for Ukraine, if not now, when? President Poroshenko and Prime Minister Yatsenyuk are very familiar with the old corrupt schemes, having observed them up close and knowledgeable about the damages they have done in the past. There are some signs, some small signs of encouragement, gas pricing reform at the insistence of the IMF, an energy reform bill that passed rather last week, a new minister, new regulator, new head of NAFTA Haas, and for those in the audience who follow these things, they all speak English, which makes optimists encouraged that they may have a more Western leaning way of doing business. Some of us pessimists may just believe that it makes them easier to tell Westerners what they think Westerners want to hear. So we're still waiting for the execution, the devil is always in the detail, and the execution of these reforms, which are quite an incomplete picture right now. So I know of no one better to help us decipher the situation than Alan Riley, who is an expert on European energy laws and regulations as well. He's a longtime observer of the Ukrainian energy scene, party by staying in touch with his many Ukrainian students, and he was in Kiev in March, I believe, and saw first hand the state of reform discussed with many people in government, industry, and the investor community. Alan will be followed by Ambassador Richard Morningstar, who is the founding director of the Atlantic Council's newly established Global Energy Center, and we have to thank Dick for bringing Alan to Washington to begin with. Thank you very much, Atlantic Council. Dick is also the former ambassador from the United States to the European Union, as well as former special envoy for Eurasian energy for both the Clinton and Obama administrations. Dick has worked on helping Ukraine meet its many energy challenges certainly longer than I have. So we will start with Alan and follow by Dick's comments. Well, good afternoon, ladies and gentlemen, and it's very delightful to be in Washington and at CSIS. And I have to say, the Gazprom Antitrust case has been with me for some years now. And I knew this morning, in fact, very early because I forgot to switch my phone off before I went to bed, and very early this morning the BBC called, and the calls have been going thick and fast ever since. So I think one immediate deduction that we can make is this. The question that American commentators were asking is, is there one European antitrust law for American software companies, and yet another European antitrust law for Russian gas companies? The answer to that question is clearly no, because last week, as Ed indicated, the Commission launched its antitrust case. It filed charges, what's called the Statement of Objections in the EU jargon, with Google. And apparently on Wednesday, the Commission will do the same thing with Gazprom. Now what I'm going to do is I'm going to talk about the Gazprom Antitrust case. I'm going to give a recap because I realize some people in the audience may not know some of the details, they're kind of bare bones to the case, and then I'm going to talk about the implications and where we might go with it, and I'll say a little about why it's taken so long, and then I'm going to look a little about the EU situation, EU supply and some of the issues which are raised there, and then I'm going to talk about Ukraine, and I'm going to try and wrap it all up. Now, just to recap, the Commission's case was launched in September 2011 with a kind of spectacular launch with a series of dawn raids by the European Commission. I say European dawn raids don't take place at dawn. Normally quite civilized after breakfast throughout 10 a.m. You have a croissant and coffee first before you do the raids. But the Commission launched raids right across Central and Eastern Europe. Gas problems offices in Berlin and in Prague were raided. And of course, the Commission can take enormous amounts of documentation. They can copy the corporate servers. They are able to obtain a vast amount of information, and they can ask questions under the threat of financial penalties to those being asked questions. So it is significant enforcement, surveillance powers. And that then resulted in the Commission opening a formal investigation the following year. And in the Commission's statement at the time, they announced that they were focusing on three principal issues. The first issue is destination clauses. Now, this is essentially a clause in the long term supply contract which says, you Poland can have our gas, here is your contract. However, you Poland are not allowed to sell it on to say Germany. Now, that's the initially my view of that was that there was no problem with doing a deal on that issue because we've increased single market integration and the fact the equalization of prices across most of the region. That was not going to be much of a problem. I now understand that the destination clause issue might be somewhat more complex in the sense that it's not actually about formal clauses in long term supply contracts. It's about practices which try and divide up the market and allow you to impose different pricing across the system. So there may be more to this than first meets the eye. The second issue is denial of third party access to pipelines and to actually to the market. And Gasprom is the dominant company is alleged to have stopped the competitors getting into the market across all the markets for the last decade. And the different sort of questions that have arisen are a situation where Gasprom classically owns a percentage, say a third of the pipeline network in a particular member state and its commercial allies and the other two thirds. And it is able to stop then anybody effectively accessing the pipeline network. Another example would be where they were able to impose pressure on the host government or other corporations within the state to stop the building of any new LNG terminals, any new pipelines, any interconnectors. So again, effectively stopping any competitors entering the market. So those sort of issues are the sort of issues in terms of denial of access to competitors which are also raised by the commission. The third and perhaps the most trickiest one is indexation. And to be frank, I'm not wholly sure what the commission's position is here. They were saying initially that they were seeking to challenge the indexation of gas prices to oil prices. Now, I have some sympathy with Gasprom on this because what exactly are they saying? I mean, the link, the traditional link of oil prices to gas prices was because when in 1967 the Great Groningen Field in the Netherlands came on stream, one had to find a pricing mechanism to actually work out how to sell this gas. And as we had at that time oil-fired power stations and we were going to use the gas also for generation of electricity, it seemed reasonable enough to link the oil price and the gas price. And I think that's the actual original practical basis for it. It was used for the same purpose. Now, of course, ever since the 1973 oil price rise, no one uses oil-fired stations in Europe. They are the last resort in any organisation of your electricity dispatch. I think there's something like 3% of European power supply capacity and 1% of actual use for obvious reasons. So the actual practical link no longer exists. The question is, can you say if there is no transactional commercial basis for the link, if a dominant company uses that link relies upon that index basis, is that sufficient to constitute abuse of dominance? I would have thought no, but there may be a lot more to it and I'm not quite sure what we're quite on about. There is another view of this that it may well be about price. The other element which is being looked at is considered by a DG Comp, which is not in the initial statement, is price discrimination across the Union, which seems to be a much more, I think, potential and hopeful legal route of investigation, which is essentially to say that if you go to the liberalised European market, or UK market, probably the most liberalised deep liquid gas market in Europe, you're paying, shall we say, around $300 per 1,000 cubic metres, whereas substantially closer to Moscow in Lithuania before they got their LNG terminal in place, they were paying close to $500 per 1,000 cubic metres and on no ordinary commercial rationale beyond the fact that the Baltic states were a gas island who were 100% dependent, could you easily justify that? So I'm not quite sure where this comes in, but pricing is an interesting issue and we'll see what DG Comp comes up with. Now, of course, initially we had the attempt to settle the case in December 2013 and we had a series of meetings with Alexander Medvedev and the officials in DG Comp. My understanding of the situation was that the major issue was overpricing and there was no resolution. Now, there was a lot of media comment about how big the fine was going to be and it is true to commissioning a fine up to 10% of the turnover of the preceding business year, which would be about, I think currently would be a $15 billion fine. However, the commission would not actually impose a fine of that size, I reckon between half a billion and $3 billion, if you look up from previous practice. The real point, though, is not any fine. The real point is that if the commission were to impose remedies on the commission, I'm sorry, on gas prom, and the remedies which would actually be a potential threat to gas prom would be as if they were forced to sell pipelines, infrastructure, storage facilities in order to reduce gas prom's market power in Europe. If, like in the Microsoft case, a monitoring trustee was appointed to oversee the operations of gas prom in the European market, I suggested a very neutral independence and a very effective person to do so would, in fact, be it. It could be the EU's monitoring trustee. But the... And with you have tremendous penal powers, you can impose further fines, you can do investigations all under the commission's prohibition decision. And of course, the other problem with a prohibition decision, if we got to that stage, was that you would end up in a situation not just of having these remedies, but with having a document which was apparently the draft of the Stable Objection so far runs to 600 pages, which would make it the longest prosecution document in the history of the European Union. But you would also have this published in 18 official languages with all the details what gas prom had done in the last decade for public view. So there were reputational issues at least for gas prom. There's also the problem that you would trigger almost immediately a series of arbitration claims in Western Europe to challenge the existing pricing structure. Because you see, if the commission rules that indexation isn't lawful or challenges current price formation, then one of the difficulties for gas prom is that all of the case only deals with Eastern Europe, or Central Eastern Europe. It doesn't deal with Western Europe, but the Western Europeans will be affected by any decision in the gas prom case for Eastern Europe, it's increasingly a single market. So they will be able to trigger the price review clauses in all of their arbitration contracts to argue downward the price of gas. They're currently importing from Russia on the basis of the commission's prohibition decision. So there's a cascade effect of any prohibition decision. And a cascade effect gets worse than that because if, say, a particular indexation is challenged, the danger is that gas prom will find itself at that decision being used all over the world against all gas producers. And it's very interesting when I did a debate with one of gas prom's lawyers in Brussels in January 2013. As I came out of the debate, I was subordinate by officials from the Chinese mission to the EU. And of course, the point is that they would use the commission's prohibition decision to deal with all of their LNG suppliers to say, well, if indexation is something that the Europeans don't want and have said is wrong, we don't want it either. So there could be a cascade effect. Now, of course, that may now be offset by lower oil prices. But nevertheless, there is this kind of broader effect and impact of the case. That's not the end of it. Perhaps the most potential damaging effect in terms of way beyond fines is the prospect of damages claims on the basis of illegal pricing being brought by states, by state utility companies, and by private corporate, energy intensive private corporations right across the whole of the European Union. So if you did a back of the envelope figure and you said, say the overcharge since 2004 in Poland, in Poland, pay about $10 billion a year for gas, you say it's the overcharge is 10%. You do the figures, you think about compound interest. That's one member state. The numbers could get very, very big indeed. So the basic advice I have given to the Russians on several occasions is whatever you do, settle the case. You cannot allow a prohibition decision to be published. This will be very, very bad news indeed. Now, of course, the commission will apparently on Wednesday issue a statement of objections. Now, you should understand the statement of objections, the antitrust charges are a private document. The commission will publish a short statement to the public. The 600 pages plus all the annexes of evidence will go to Moscow and that will be private. We won't see it. And the commission, although this is a prosecution under Article 7 of Regulation 1, 2003, at any point before the commission files a prohibition decision, the gas prom can come forward under Article 9 and seek settlement, what's known as a commitment decision. So the fact that charges have been filed does not mean that there will not yet be a settlement. It is certainly in the interests of Moscow to make a settlement. And you can argue that it's actually easier to make a settlement today than it was in 2012. And one of the reasons for this, as I mentioned earlier, is in relation to the oil price. The oil price has fallen. The arguments around the oil price are much, much more difficult to make for gas prom than they were a few years ago. And in particular, if you take the view that I tend to take that we're going to be with lower oil prices for at least a while, you've got to ask the question, is it worthwhile for gas prom to fight on this front? Equally, the European market is being put together. You have energy union on the way. Both its physically interconnections are being strengthened. The third energy package is being employed across the market. So all the points that gas prom is trying to fight on are actually practically commercially difficult to sustain. So why basically try and defend what is increasingly indefensible and commercially impractical? Why not just do a deal? And I actually think in truth, if it was just an ordinary company, a deal would be possible. But the question I have got, and I don't have an answer to this, perhaps people in the audience have an answer, is that given the fact that Russia has become so radicalized in the last 18 months, can Alexander Medvedev actually go to Vladimir Putin and say, Vladimir Vladimirovich, the sensible thing here is to do a deal. Do we think, given what we hear from the Russian media and the rhetoric of the Russian political establishment, a deal is possible? If it is correct that a deal is not possible, then we end it with a prohibition decision. And I think if the commission is launching it in April of 2015, and they give the, shall we say, they give the Russians four to six months to file a response, you have an oral hearing, so we would be looking probably next year at a prohibition decision, presumably diplomatically after the end of the 2016 heating season. And if we have that decision in place, that will have a profound effect on Russian energy power in Europe. And make no mistake, as the European market becomes more integrated, as we alternative sources of supply, that decision will have a significant diminution in Russian energy power. Now, what do we think this, do we think the Russians, what sort of reaction do we think we can have from Gazprom? Well, I think they're already doing things. What I notice is that there's a selling of Russian energy assets. In Europe, you see Wintersaw recently being sold, you see the trading operation moving from London to St. Petersburg, and you see an alternative strategy appearing. And one of the arguments I've got at the moment is that you're seeing this Russian capture of Turkey. And one of the real reasons for the Turkstream decision on the 1st of December was that in October and November, the Russians reduced the supply of gas to Turkey by 50%, causing panic in Ankara. And that was provided substantial incentive to actually do the deal that the Turks did. They're already 60% dependent on Russian gas, and they're paying higher prices for gas than Ukraine. And there appears to be a Russian strategy to buy a large number of energy assets in Turkey.  And you try and hold on to the one country in Europe with growing gas demand if you can. So this appears to be what is happening. How does the EU respond? I think part of it is applying the antitrust case. Partly it's about ensuring we complete the single market and put interconnections in place. We deal with our weak links. Bulgaria is one of them. Brendan Devlin, EU Commission official in the Energy Department recently pointed out that even when we've been putting funds available on the table to build interconnected, the Bulgarians haven't been building the interconnected. And we have to urgently assist Turkey. So I can talk more about the EU issues, but I want to now move on to talking about Ukraine. So how do we judge Ukraine? I think it's very mixed. I think there is good news. One is that it is spring. We got through the winter. There were no cut-offs. We survived. So that's a good start. Cue national anthem. Another success, which has been with the EU cooperation, is the reverse flow movement. This is actually buying Russian gas on the EU market. Actually, sometimes not Russian gas, but usually Russian gas. And reverse flowing it into Ukraine. And I want to talk about this a bit, because I think it's both been successful. I mean, I think in 2014, Ukraine got about 5 billion cubic meters of gas on reverse flow. But it's got significant potential more. Both for Ukraine, other EU states, and the Balkans. And let me explain this. There is an interconnector, which runs between Slovakia and Ukraine, which is the main interconnector. It has about 80 billion cubic meters of capacity. Most of that is not being used by Gazprom. About half of that's not being used by Gazprom. Now, under EU rules, we have, under EU liberalization rules, we have use it or lose it rules. That is, if you don't use it, it can be regulated. You can reallocate it on request. And also, because Gazprom is a dominant supplier, if your dominant supplier is sitting on capacity it doesn't use and a competitor wants it, then and refuses it. In primer phase, you're in breach of abuse of dominance territory. Nothing has happened about this. And I think something has to happen about this, because it has a very substantial European and Ukrainian supply security issues attached to it. So part of it, of course, is that you could potentially reverse flow a large amount of gas, like 30 billion cubic meters, on that pipeline. But the other point about it is, it's because of the density of the transit network in Ukraine, you could also take some of that reverse flow gas. And if you like reverse, reverse flow gas, so take it into Ukraine and then take it through the Ukrainian transit system into the Balkans, Romania and into Bulgaria, and provide alternative supply of gas. And given what I've just said about Turkey, it will be potentially, it would be possible to provide gas to Turkey as well, through the Ukrainian reverse, reverse flow facility. So that's something which I think is very valuable. And we should really try and look at that and develop it. And the EU needs to get together on dealing with the problems. The Slovak regulators have not moved on that, despite requests from Ukraine. And it's an area where GG competition, I think, need to act. Now, that's some of the good stuff. There is some more good stuff. I think you see moves to, you've seen the major move to introduce uniform pricing for gas in Ukraine. Because there is the argument that is very terrible for poor Ukrainians. But the point people have to understand is that differential pricing is not for poor Ukrainians. It's for rich Ukrainian oligarchs. Because essentially, there is a substantial siphoning off of the gas, which was supposed to be for households, to various parts of the business elite. So creating uniform pricing cuts out that potential form of corruption. And as long as you put in a proper subsidy regime for those who need it, you have a far more socially just outcome. So that's something which is positive for moving in my direction. We've had, as Ed mentioned, the formal introduction of liberalization into the Ukrainian law. So following the EU model of liberalization, this is a good thing. Now, the difficult here is with all of this, the devil is both in the detail and then in the execution. And it's far from clear that we are going to get to where we want to with this. I mean, one of the problems is that everyone says, oh, there's an energy regulator. This is all very well. But you also need an antitrust regulator. And Ukraine does not have an effective antitrust regulator. The anti-monopoly committee is to be kind, one would say it is very dysfunctional. And I think one person in the audience here used the phrase that it was, in fact, a camouflage institution, where its actual job was to do almost the direct opposite of what a competition authority is supposed to do. I.e., is supposed to support price fixing, support market concentration, and support all of the corrupt lead in the state. So the point about it is, is that if you look at what's happened in the European Union, it wasn't the energy regulators who actually liberalized the European market. It was the antitrust agency who used the more powerful tool, antitrust tools, to break open a market. So if you don't have that, it's going to be very difficult to move. And I see so far I see no sign of that. There are other problems as well. There is what I call the royalty tax disaster of increasing the taxes on gas production from 28% to 55%. This essentially, and also they closed the market to most of the independent gas producers customers, so a significant market intervention. And the effect of that has been that the independent gas producers faced with a situation where if they produced gas and tried to sell it, they would lose money, have not naturally responded by reducing their gas production. So on one side, you've got the Ukrainian government busily talking about reverse flows and going around Europe, trying to get more reverse flow. And they've been quite successful at that. And we're working on that. On the other hand, they introduced a tax regime which suppresses gas production in the country. JXK, quite interestingly, one of the gas producers of the British company went to Stockholm and used in the expropriation rules the Energy Charter Treaty, obtained an emergency ruling which actually ruled the increase unlawful. And we'll see how that works out. So the question is, what is this? Because one of the issues is, what's underlying this? Is this still other forms of energy corruption in the Ukrainian energy sector? Is this the old game being played again? Is the idea that essentially all these companies who are independent, who are operating in the sector, who were trying to produce gas, the idea is to stop them producing gas so they're all in breach of their licenses. And then they can be reallocated as somebody who is some friend of somebody in the government. Is that what's going on? Is the old game being played? I mean, some of the moves against like Kolomysky, you can see, seem to be reasonable step measures to control over mighty oligarchs. Question of, I'll provide, affording a lot of these very rich and corrupt energy groups to pay for access to networks seems reasonable. But then again, how reasonably is it to reopen privatizations like Kometov's privatizations? Is this another attempt to play all of the old games of oligarchic reallocation of assets in the Ukrainian energy sector? And the concern is, is that this is essentially what we're looking at is one side steps to reform. At another side, all the old games being played. And the danger of this is that they lose, first of all, they don't get any investment in the country. I was, as Ed mentioned, I was at the Ukrainian Energy Forum in Kiev in March. And what you could see was that the royalty tax issue was destroying any interest or discussion of foreign investors in contemplating investment. There's no point in even having discussion about Ukrainian shale gas or secondary gas fields or any form of investment when you see something like the royalty tax issue arising. So there are, I think there are a lot of questions in the Ukraine about what is really going on, who is doing it, why it is being done. And the concern I've got is that we are trying to help save Ukraine. The West is putting in the IMF's put in $17 billion. There's a huge amount of support and goodwill. And I worry sometimes that this, what we're seeing is a rerun of the White Guards. Remember in during the Russian Revolution, the White Guards, the aristocrats, the ex-aristocrats were busily trying to fight the Red Guards. And British, French and American troops were in various parts of the Russian Empire supporting the White Guards. But the White Guards were group people who learned nothing and know nothing. So when they took over territory, they reimposed terrorist rule and control of the serfs, who not naturally rather objected to this. And as a consequence, they supported the Red Guards and the result was history and the complete inability of the White Guards to learn that there had been a revolution. There was a reason for a revolution and they needed to change, was lost on them. They could not bring themselves to do that. And what I worry with the oligarchs is that they don't understand that the mayden has happened. They don't understand that people have lost their lives. They don't understand that there is war on and that change is possible. And equally, the West will not ultimately put up with this unwillingness to reform. I said, on the other side of this, we do have this very strong reformist in the government and they are pushing. Clearly what we have to do is strongly support the reformist elements within the government. And I want to make one practical proposal. One of the institutions which exists is the energy community, which supplies the EU's energy rules, energy and competition and environmental rules, to the states of South East Balkans and Moldova and Ukraine. I have actually written about this previously, but one of my proposals is that we should Europeanise the energy community because the energy community only really provides the actual text of the EU rules. It doesn't provide the institutional and constitutional support. So my proposal was that the Ukrainians assign a special protocol with the energy community, which would turn the energy secretariat, which is currently based into Vienna, into having full European Commission powers and create an energy court, which we can put it in Kiev, which would basically have international judges as well as clean Ukrainian judges. And we would use that to enforce the full application of the EU's energy equity across the territory of Ukraine in order to actually ensure that the energy market was fully opened up and international investors could rely upon that and we could see change reform actually happening. I think that's one particular thing I was going to mention. There are lots of other questions that I could look at in relation to the Ukrainian energy market, but perhaps the best thing is I've been talking for about 45 minutes. We'll be to hear from Dick and then perhaps have some Q&A. Okay, thank you. Thank you very much, Alan. Dick, time for reform in Ukraine? Well, first of all, and you said I should sit, right? Up to you. Okay, well then I'll sit. First of all, I'm a little bit, feel a little bit humbled following both Ed and Alan because they both know a lot more about Ukraine than I do at this point, but I will make a few points. And before making those points, I wanna emphasize that today's program is the first game of a double header and that for those of you who are not aware, tomorrow we are having a program at the Atlantic Council, a three hour program on the European Energy Union, on the third energy package, competition laws and what the geopolitical ramifications are. And I will say that of the eight people participating, six, including me, are in this room right now. So it really is the first game of a double header. There's gonna be Ed, Alan, Bud Koot, John Roberts who came in, Brenda Schaefer. And don't tell me, who am I forgetting? Am I forgetting somebody here? You had six, you had six. Oh, I had six, because there was me. But we'll, see, I'm really a very, I have no ego, I forgot me. But we'll also have Philip Lowe who had been the director general, both the competition directorate and then the energy directorate who's responsible for a lot of this and a representative from the energy counselor from the EU mission. Okay, having said that, let me make a few brief responses. I agree with Alan, in fact I agree with virtually everything he said, but I do think that the decision to file competition, to file a competition case or charges against Gazprom is tremendously important, even beyond saying that what's good for Google is good for Gazprom. And I think it also has a significant relationship regarding Ukraine. I mean, one of the things that I feel very strongly about, and I'll say again tomorrow, I think, and have said in the past, there's a lot of things that the EU can do to improve its energy security. But I think the number one priority is following their own laws. And I think they've been doing that more, including bringing the case, including bringing the case against Gazprom. And I'll also say that following and ensuring compliance in the third energy package is also critically important. And this all relates in part to the competition case, which Alan mentioned because of the importance of third party access and the importance of eliminating destination clauses. So what does that mean with respect to Ukraine? First of all, it had a major effect on, I think, on Russia's decision to once and for all cancel South Stream, and that I think the Russians did recognize that the EU was not gonna let it happen. And I think that became politically obvious after the situation with Crimea and Eastern Ukraine. So I think it had a positive effect there. And I'll get to Turkish Stream briefly in a minute. The third party access provisions are also in enforcing that, critically important because of what Alan was talking about, same with destination clauses in connection with reverse flow and reverse flow. And Russia has put pressure in the last, certainly over the last year on some of the countries that were involved in reverse flow, whether it be Slovakia or Hungary. And I think that if the EU just sticks to its laws and really enforces it, then that hopefully would beat back Russian pressure. So this is all really important. On another area that I don't think Alan mentioned, what's the significance of the fragile agreements that Russia and Ukraine, in spite of all the problems with Crimea and Eastern Ukraine, have been reaching with respect to paying back the debt and supply of gas over the last year. And I've heard from one of my contacts in the State Department even today that there is some progress being made, hopefully, in the negotiations. So why, with all that's going on and with this Turkish Stream concept and or maybe more than concept at this point, why isn't Russia just saying to Ukraine, screw you, we're not gonna provide any gas and we'll deal somehow with the Europeans. I think there's a couple of reasons. I think Russia does recognize that the EU is more likely to stand by its laws and regulations now. And I think Russia does need Ukraine for transit, at least through 2019. And I would guess for a long time, for a long time after that. Russia can't risk its gas supply to Europe and having some accommodation with Ukraine is necessary in order to guarantee that. Russia needs every, whatever, however they get paid Euro that it can get right now, given its economic difficulties. And I think Russia, I hope on, at least on their rational side, recognizes that the Turkish Stream concept, although interesting, that there are problems with respect to that. That they can't count on totally being able to avoid Ukraine because of Turkish Stream. We have to remember one, that the first pipeline would simply replace existing gas going to Turkey. And second, assuming they build the second pipeline, that's 15 BCM, a lot more is going through, although less than in the past, a lot more is going through Ukraine than that. And that Turkish Stream poses its own legal problems. Again, if the EU follows its laws, any pipeline coming from the European border after picking up Russian gas as part of Turkish Stream would have to comply with third party access, would have to comply with no destination clauses. Russia would have to, or Gazprom would face same competition rules that they're facing now. There are existing contracts going through Ukraine. That would have to be amended. And I could make the argument, if all of a sudden Russia saw the handwriting on the wall and was willing to comply with all of the EU laws and regulations and were acting transparently, then Gazprom has as much right to sell gas as anybody else. And if they do follow the law, then the markets should take care of what's the most efficient way of supplying gas. Getting back more specifically to Ukraine, just a couple of points, Alan mentioned virtually all of them, but the real question is, will it continue to be Groundhog Day in Ukraine? I've often said, going back to when I started working on Ukraine in 1993 or four, I guess, that every day you wake up in Ukraine and it's the same day, just like the movie. And so the question is, and Alan raised the question, yeah, there are some positive signs, but can those positive signs be sustained? And there are some new people who hopefully, if given the chance, will be able to cause the appropriate reforms to take place. And I know there's been some very impressive people, but we'll see. I mean, you talked about corruption, Alan, and one of the things that I meant to mention in talking about Russia's agreements with Ukraine, there's another more sinister reason why those agreements are taking place and that there are people on both sides of that border that are making a lot of money on these agreements, so that has to be part of it too. But the other thing that is gonna be critical, and there has been some lessening of demand in Ukraine, that has to continue. The demand side is gonna be tremendously important and the whole question of energy efficiency once and for all has to be, really has to take hold and the uniform pricing might help that and force residential consumers not to open their windows so much. And the other thing, there really is an opportunity with respect to domestic production if they do the right things. And this whole concept, they raised taxes on domestic production recently. My good friend, Ariel Cullen, described back there, described it as hair-brained. I'm not sure I would, if I were writing an article, I'm not sure I would say hair-brained, but he's right. And it does seem sort of crazy when it's so important it's so important to increase production and to create an atmosphere for investment, although admittedly that I think investment is, it's gonna be a while given the political difficulties in Ukraine and that's gonna have to stabilize. I think just going through my notes, I think I've covered what I guess, yeah, I think I've said enough for now and hopefully open it up for questions. Thank you, Dick. I guess I would describe you as cautiously optimistic then because you might remember in the movie Groundhog Day that the character that Bill Murray played actually did learn at the end to be a nicer person after having made every mistake that you can possibly imagine first. And that may be the case for Ukraine as well. Allen is the current state of the antitrust case given as you said that in some ways market conditions have shifted in some ways, Gazprom's own business practices have changed just in the past few months. Is it really about future remedies or is it really about penalties for anti-competitive practices in the past? And how would you evaluate the prospect of this arbitration case between Gazprom and Naftahass that both sides sort of put out there as the way to resolve their long-term issues given as you and I know that the predictability and the time that's consumed with arbitration cases, how likely is that? Or both sides assuming that there's no political obstacle but much better off to settle their differences rather than wait for a stock home decision. Yeah, let me just take the... Sorry, I'll take the antitrust case first. The, I think the commission's approach will be, to some degree the fine is the punishment. The remedies tend to be much more future-based. And I think it's the remedies which are what which are that, which will get Gazprom, give Gazprom the most concern. And the, as I say, I do actually wonder if they're actually preparing for this already by selling some of the downstream assets. And rather than, of course, the problem is if you, even with the best will in the world, if the commission even gives them a reasonable period of time to sell their assets, it does become a bit of far sale and you won't get the best price for them. So there's an argument, you know, you start doing that before actually the commission says you're required to sell them. So that's, that may be going on. I think they, the monitoring trustee issue is something which I think they would fiercely resist. The idea of having the antitrust agency effectively in your office and, you know, sort of hovering above you on a permanent basis and anybody can go and complain. Over anything, and you'll get a full investigation. And that could go on for years. In fact, I remember with some Gazprom officials in the room at a Chatham House seminar, I said the best thing Gazprom could do is go and talk to Microsoft. Bill Gates knows all about it. And I suggested it would be, that's one thing which I think they would really object to. But I think that's, I mean, partly it depends, we don't know the scale of what they found in the cases. I know some of the issues, you know, you talk to a lot of lawyers who dealt with other cases, a lot of officials from a lot of companies across Europe, they give you a view of what has gone on. And we can talk about destination clauses and the interaction between those and taking pay clauses and so forth and the process of nature and whatever. But they're all the detail, the granularity detail we don't have. So it's difficult, and of course, the commission will shape their remedies around the detail of the case, which we just say is not available. So we will see, but we can see that, that's the sort of thing that we're probably looking at. And clearly the pricing issue, if they were to rule indexation, was unlawful, that there are two issues to that. I actually think given the fact that all prices have fallen, that's not, going forward, that's not too much of a problem. The real problem is the prospect of damages claims. And that's from the historic liability. And that could get, and the thing about that is that in many ways, abuse of dominance damages claims are the worst thing possible. Because in a cartel case, cartel damages, the cartels only intend to go on for a few years. Whereas, you know, you could potentially, I mean, I was discussing about Ukraine. So Ukraine would theoretically, from its introduction of a competition law in about 1994 to today, would potentially be able to put together an antitrust claim, which we're going on for 20 years, plus interest. The numbers could get kind of amazing. So that's part of this. And I think part of it, we have to sift out and find out what exactly the commission is going to levy the case on. The other issue, of course, which we will find out on Wednesday, is whether, as in the dual case, is the, if vestige decides to narrow the focus of the case. And what I'm wondering about is whether or not she might drop the pricing issue to focus on the denial of third-party access and the destination clauses. Because that would give the, the advantage of that is that it would give the commission, it would give Gazprom, effectively, no room to argue on the basis, assume that the commission has the evidence. He's a very straightforward legal test, depending on the evidence you've got. It is very well known case law. You can apply the case and run the case. And then it would be very difficult for Gazprom should then settle, if they didn't settle, they would prosecute it and they would lose. So that's, that is, that may be one option for the commission in this, we shall see. On arbitration cases, I suspect that this simply comes down to a money issue. How much money can they squeeze out of NAFTA gas? And the case, in many ways, the arbitration is the best place to deal with it, to get a result and they'll live with it. And it may well be a politically easier for Gazprom to do that with its own high command, with the Kremlin, to be able to actually do, to simply put it in there and say that's the best way of dealing with it, rather than actually try and do a negotiation where they have to, with my understanding of the relationship between the Gazprom and the Kremlin, is that they would have to, any deal would have to get signed off right at the top. And that may be actually difficult. I guess the problem is that the dollar amounts are potentially huge, I mean, beyond the capabilities of the Ukrainian state, given that it's not only a pricing dispute, but also a dispute over the take or pay volumes that Ukraine has underperformed on for many years. Yeah, yeah, well, the problem for Gazprom, the other issue, which I should just say, is that technically, there are one of the difficulties for Gazprom and one of the reasons why initially, I wondered why they would do this, is that the danger is, is the interaction of destination closures and take or pay clauses is incredibly oppressive. And I am far from convinced that arbitrators would support Gazprom in the take or pay courses, in supporting take or pay and connection with the destination clause. And that is the case. I think that we're getting a ruling which said it was unlawful, it was oppressive and struck out, will be very damaging for Gazprom because it would also apply to all these other countries, everyone, but then there'd be more price reviews across the whole continent. So you can see where that would be, we shall see, I'm not sure how it goes. Thank you. We have slightly less than half an hour for questions and discussion. So please wait for the microphone if you have a question and if you have a statement to make, that's fine, just make it short. And if you can end with a question mark that would be helpful as well. John Roberts up front. And please state who you are. John Roberts. We're being filmed. It's a question for Alan. South Stream would have enabled Gazprom to deliver gas to its customers in Central Europe. And there would have been no bar from the European Union to giving it the necessary exemption for its initial deliveries before any question of third party access had to be applied. Now that the Russians have abandoned South Stream, how will Gazprom get its gas to customers in Central Europe? And is it impacted by the fact that it is contracted to deliver to specific countries but in fact only has control of the gas until it reaches the EU borders? Does it have to reach commercial contracts for use of pipelines in Europe? And what happens if those pipelines aren't available? There are a whole number of questions there in fact. Let me try and unpack some of this. I think the issue of exemption is really quite interesting. Gazprom complains that it's very unfair, they should have exemptions and it gives, I've been in a debate with Gazprom officials and they give a list of all the exemptions from the third energy package which are applied to various bits of European infrastructure, largely L and G terminals. And they go, this is very, very unfair. We don't get an exemption. And I think the answers to that are two-fold. One is you do actually have to apply for an exemption in order to get one. There's a small detail. The second is that the problem with South Stream and the problem with Turk Stream is that, and which distinguishes it from all of the other energy projects, is that it is not new gas. It's not increasing supply to the European market. It is merely diverting supply from one point of entry to another point of entry. So there is a distinction which does allow the commission to potentially veto any exemption. And my suspicion of why, one of the reasons, there are a couple of reasons. One is that Gazprom didn't want to actually get itself tied up in EU regulation and wanted to find itself a way around it. But the second reason is that their lawyers advised them that if they really applied for an exemption, they would lose on this not actually providing EU competition provision of the gas directive. I think that is where I think that's part of what's going on. The other problem they've got with Turk Stream, and in fact, they had also with South Stream, was that the contracts, long-term supply contracts, which Gazprom has with all of its various European customers, nominate routes of supply, most of which are through Ukraine. So the difficulty is you cannot, without negotiation, simply divert the gas supply to some other direction. So this is a, how do you get around this? And that is, I think, a real problem for Gazprom. Now, with South Stream, one of the advantages was that it brought it directly into the European market and plugged it into the European system. Obviously, there was significant infrastructure build, but you could do that if, of course, you got permission to use the gas network. And you could actually, the commission agreed. With Turk Stream, what Alexi Miller is saying is that they're going to stop it, they're going to build it to the European border, and then it was almost as if the EU is gonna come in and pick it up, in trucks or something, I don't know how. But the problem there is that, we are not going to build the pipelines. We will be crazy to build the pipelines because we will be locking ourselves in to more expensive gas and more Russian dependency. So the one thing that we're not going to do is build pipelines from the Turkish border into the European market. And as I say, even if we were crazy enough to do that, the problem is they've still got to negotiate all the long-term supply contracts, which direct all the gas to come into Europe via Ukraine. So I think so, and in addition to which, there is the other problem which has, which is the same problem with South Stream, is that given you US and EU sanctions, who is going to finance these pipelines? How is Gazprom, which is facing potentially 50% cut in income next year, going to finance the pipelines? You know, Gazprom is supposed to be building Turkstream, building the pipelines to China, one of which, one Gazprom official suggested to me was going to be so expensive, we should call it Goldstream. So the, how on earth does this work? Yes. Yeah, go ahead, Dick. Yeah, I was just going to just make just one little addendum. I think the point you made on the diversification provisions are really important and it is spelled out in, you know, as a legal requirement that for any exemption, you have to show a diversification. And just Gazprom has always argued that, well, you know, if you get out of your, going through Ukraine, you have diversification because there's a diversification of routes. But I think we would both agree that it's unlikely. Certainly the Brendan Devlin's of the world would never accept that, so. And also the problem with this is that, I said this to senior legal counsel at Gazprom. I said, the problem you've got with your argument is that you can't just expect the commission to do this because the commission recognize that it's a legal structure. You would get a commission decision providing for exemption. That decision is challengeable by anybody who has a legitimate interest to challenge it. So a competitor, a member state which can challenge as a right would challenge that before the European courts. And they would rely on the point I've just made to strike it down. So the difficulty with this is that even if the commission wanted to do this, you know, if I was in the legal service of the commission in the energy ekip which shadows the energy and I was asked about this, my opinion will be that you could not safely grant an exemption to the Russians because it doesn't fit within the criteria because we will get sued. It seems to me that the thing that's also missed is that it means less money for Gazprom. I mean, to build new expensive infrastructure in order to move the same gas means either a lower net back to well head or a higher price for the consumer. I mean, there are only two ways of paying for that expensive transportation cost rather than using old pipes. And the difference with power Siberia at least conceptually is that it's new gas from two new gas fields that otherwise would be stranded to move to a new market. Now, it may not be a very good project either but at least it has that justification whereas moving old gas to the same market through more securities expensive route is a loser financially for Gazprom. Patrick, did you have a good? Then the gentleman there. It's Patrick Wilson. I'm now with Osage Global Strategies and my question really picks up with what you just said and I'm interested to see what both Ambassador Morningstar and Professor Riley you think about this. All the intellectual talent plus all the capital that's chasing around to try to solve this problem could obviously be redirected in a way of getting new power generation. I'm struck by the fact that if you looked only at Ukraine if you tried to take 10% of the existing gas and heat power generation to another fuel source say bio gas I think it's less attractive than just biomass pure and simple. You could permanently move Ukraine off of any kind of gas and then you don't have to have, and I've heard it estimated you could do 10% for less than $5 billion. Then you're looking at 40 years of no gas plus a whole new market for a new fuel. Why aren't we spending more time focused on solutions like that? I think the answer to that question is is that there are, I mean there are loads of issues and we're one of them. I think if you took, if the Ukrainians get to Polish standards of energy efficiency, so not Western European or American standards but Polish standards of energy efficiency, I think Ukraine would need very little or almost no Russian gas. And I think this is actually to do with the dysfunctional nation of the state. The reason why we can't do that is the fact that who's gonna put up even $5 billion with investment if you've got decisions like the royalty tax decision being made. And I think that's part of the trouble here is that, and again, sometimes I think as I said earlier, the elites don't appreciate the damage they do to all of this. You hear on one side, Prime Minister Yatsenuk supporting the royalty tax. On the other side, he's going around asking for foreign investment, you know. The two don't connect. You know, you can't actually make this work unless you carry out reform. There are a low, I mean I actually think if we actually refer, Ukraine has an enormous possibility with the energy sector. I mean, I don't think it's somewhat negative but let me just be really positive from there. And if we can reform this, if the West can support Ukraine and we can get reforms effective and through and executed, then the potential is absolutely enormous. We can massively reduce energy use in Ukraine. Ukraine was the original home of the Soviet gas industry. It has enormous amounts of oil and gas resources which we could reduce. We could turn Ukraine into a net exporter of gas into the European Union. It has got the largest storage resources in Europe. They carry 30 billion cubic meters. They could be extended to five billion cubic meters. It's got the largest transit network, 10,000 kilometers, 40,000 kilometers. It's got all this gas supply as well. It could create the liquid trading hub for Central and Eastern Europe. The Kiev price will become the dominant price for gas on the hub for the whole region. And even the Russians would have to follow it. And we would have a much more secure supply situation for the whole region. That is the potential of what we could do. But we need to be able to do these reforms. This is a huge barrier and hopefully we can transform it. There are opportunities and the potential is absolutely enormous. Well, people have been saying this since 1990. I don't think it is a question of ignoring I think Alan's right. It's not a question of ignoring solutions. Obviously, we talk a lot about Russia. We talk a lot about Russian supply of gas and how to get more gas into Ukraine because that's sort of a salient, immediate topic. But I know that there are people who are working with the Ukrainian government along the lines that you're talking and what Alan was just saying, that with appropriate investment, you could increase the efficiency. You could increase domestic gas production for getting shale, which the companies argue it's not just the politics that has driven us out. It's just not a very good geology apparently for shale. We'll find out. And maybe at some point offshore production. But that's definitely being looked at. I'm going to group a couple of questions so that we make sure we can get through them all. Hi. Tom O'Donnell. I'm here from Berlin. I'm doing a study with the AICGS, the Contemporary German Studies, on these issues and the difference in the American and European viewpoints. One thing, there's a group at Oxford, a Stearns group of course. And it seems like there was a report recently. They had an interpretation, some kind of interpretation of the move to Turkish dream as being perhaps gas prom has sort of de facto a bit the bullet and see what the future is. And this is a move towards a private market model. They're going to deliver the gas and the world can come and take it. And if you could respond to that, let me pick one of the other questions here. Quickly, if you don't mind. Just from the viewpoint of sort of grand strategy or geopolitics, Mr. Putin has a lot of ways to exert geopolitical pressure obviously in a number of states, including eastern Ukraine. Do you think there might be a possibility that the questions that we're talking about here, the anti-trust issues and compliance with the energy package, if they might be entered into by him or by somebody else, some compromises entered into the geopolitical negotiations? Hold on one second. I'm going to group couple two or three. Thank you, Irina Palyashvili, Ukrainian legal group. And my question to Alan, when you said there is a mixed back in Ukraine record, where are you placing this mixed back on which side the new law on gas market, which was adopted recently with a very strong input from energy community secretariat. And I think they're satisfied and unbundling Nasta gas. And second, at the end of last year, Yatsenyuk very strongly promoted the idea of consortium to run the gas transportation system, which includes also huge storage. This idea sort of faded a little bit. I don't know why, but with reverse, reverse, maybe that's a good idea to come back to. Hi, Michael Radner with Congressional Research Service. My question gets that, you talked about gas prom already selling some assets. In the future, I guess, what would prevent Russia or gas prom from, or a new company being formed, let's call it Nukoprom and Russia and gas prom putting in certain assets into that. But if ultimately it reports up to the Kremlin, does it really matter if the assets are being controlled by other Russian companies? Let me take you through all of that. I'm actually gonna start with your question first. Nukoprom. This is a version of another story I heard. I can't tell you which foreign minister asked me this, but I don't know whether you heard it from the Russians or from various intelligence services. But what he said to me was that he has heard that one idea of gas prom to deal with the antitrust case was simply to bankrupt the company. And then that would escape all this antitrust rule, the antitrust rules. And I had to explain that neither you can't do that in the United States, because the DOJ would be very upset indeed. And you can't do that in Europe either, because Gigi Kamp were very upset. And in both cases, what we would do, we would trace into the assets and into the holder. We don't take it legally in antitrust law, both in Europe and the States, we don't take a legally formalist approach to the subject. You can actually go behind the corporate shield and go to the ultimate owners and controllers of the assets. So any kind of bankruptcy and creating a new company wouldn't work, and a Nukom prom would not work either. And in fact, I pointed out one of the very bad points about bankruptcy was that it would immediately trigger default on all your long-term supply contracts, meaning that all those oppressive take and pay clause and destination clauses would no longer be applied, which will be very bad indeed from Gasprong's point of view. So I'm quite sure Cleariz, who are the lawyers, made all those points to them as well. So they're not gonna do that. So I think that's interesting, I would agree. On Irene's point about the new law, I think the new law is definitely on the good side of the ledger. It's moving in the right direction. And my question is, is really it's going to be in the detail and execution and creation of the market codes and actually in enforcement. As I say, I do worry about the lack of an effective anti-trust regulator support, the energy regulator. And the other issue on consortia, I don't know. I mean, can I take down a little deeper on that? Why is unbundling the gas transmission system and the underground storage company a good thing? From a Ukrainian point of view, never mind that unbundling is the fashionable thing to do in Europe, but from a Ukrainian point of view, isn't it more urgent to break up the horizontal monopolies on production of both electricity and oil and gas than it is to break up vertical integration that actually made some commercial sense? Well, I think the argument I would say is that what the initial liberalization proposals are unnecessary, but not sufficient. And I entirely agree with you. And I think at least what you're doing then is creating transparency in the sector which has been riddled with corruption. And I think that is one of the major advantage of this is I think if you like, what is the Ukrainian USP for liberalization? In Europe, it's largely about more open competition and so forth for allowing new suppliers in. And that also applies to Ukraine, but I think the big thing for Ukraine is the corruption issues. And it's much more difficult to run a corrupt system if you've unbundled the network and you've got an independent regulator. And it makes it much more tricky to do that sort of thing. But of course, that's one of the reasons why I argue for an antitrust regulator is that actually they would be able to actually go after the utilities. And of course, one of the things that DG Comp did during the energy sector require, before the energy sector require in Central and Eastern Europe, which is Gasprom case, it's part of, there was an energy sector inquiry in West Europe. And one of the things that Commission did was they actually forced the breakup of networks and forced suppliers to break up as part of the antitrust case. They run about against these companies. So I actually, it's the antitrust issues which are there and that's why not having an anti-monopoly committee which works is actually an issue. But certainly one of my worries actually about Ukrainian reform is that Pignig, I think what I worry about is that they would end up being a bit like the Polish reforms. That essentially you end up with liberalization which formally follows the EU rules. But you end up with this incredibly powerful, dominant energy company which actually undermines performance in the energy sector in Poland. And that could actually happen in Ukraine as well. There again, the side of that question is that at least it would be better than it currently is but still it wouldn't be as, it was nowhere near optimal. So I think that's that. And on Turkstream, can you play antitrust, can you play geopolitical games with antitrust law? That's, the answer to that is no. The best example of that is actually in Daniel Gergen's book, The Prize, when he describes in the 1950s State Department trying to get all the energy companies together to actually support a ring against Iran. And basically they all said, it's okay for the State Department to say this but we know we will then get prosecuted by the DOJ. So you must be joking. And the problem with the playing geopolitics with this is that the antitrust lawyers and antitrust regulators on both sides of the Atlantic won't play ball. And the difficulty is, is because of the legal constitutional structures in Europe where antitrust law is effectively a constitutional provision, there is just no way around playing it because of course, if DGCOP were to play that game which they wouldn't do, if they were to play that game they would get sued.  So there is, which could be used. You just don't wanna get in that position if you were a rebels antitrust regulator. I think that's everything. A couple of points. The question on picking it up, if it was Miller just basically saying, hey, we'll bring it to the border and pick it up and do it as you will if you want our gas, he said that. But I don't know whether he was thinking in free market terms or not, but that might be the effect of it. I mean, that's really the only way Turkish stream could work, it seems to me, is that if the gas was brought to the border and then if through an open market, new pipelines were built or whatever needed to be done to get the gas on into Europe and following all of the provisions that we've talked about, well, that's a free market answer to that, which maybe that's okay. On the geopolitical compromise point, and I agree with Alan, I mean, a law, even though it's complicated when you try and go through all the provisions, the basic principles are not that difficult. And I agree with Alan that it is what it is. And at this point, I don't think the EU, I don't think the EU can compromise. There's an interesting situation right now which demonstrates that the politicians in Brussels were anxious that Socar, the state oil company of Azerbaijan, put in a bid on the privatization of DESFA, which is the Greek infrastructure company. And from a political standpoint, that was essentially to make sure that Gazprom didn't get it and to give an alternative. But lo and behold, now the commission is holding up approval for that purchase because they've recognized, well, wait a second. Socar is part of the consortium producing the gas in the Caspian and now we're gonna let them be part of the transmit by owning DESFA, part of the transmission in Greece. And if we're not allowing Gazprom, saying that Gazprom can't do these things, how can we say that Socar can do these things? It's sort of a bizarre situation for the Azerbaijanis.  But then, you know, when you think it through from a precedent standpoint, they may be right. And I think, frankly, and I said this last week at a similar kind of panel, I said that from Socar's standpoint, behind the scenes, as long as Gazprom doesn't get it or some sham substitute for Gazprom, which I think is what would make a new coprom impossible. I mean, if I'm the president of Socar, I'm saying, make my day. I mean, I've got enough, you know, I've got enough capital expenditures right now, the way it is between Chaktanis and Tanap and so on. And as long as we don't have Gazprom screwing things up in Greece, which by the way, there are meetings today about Russia and Greece energy cooperation. But in any event, then fine. You know, we don't need desks. The idea of we will move our gas to a border of our choosing, and you take it away reminds me strikingly of the Turkmen export strategy. And as long as you're dealing with China, that might work, but otherwise it's hard to fathom. We have time for one more round of last round of questions. Ariel. Thank you, Ariel Cohen, Center for Energy, Natural Resources and Geopolitics. Just to follow up on what Richard was discussing. Number one, do you discern a position in Brussels today about this Russian scheme? And I will not use harebrained because I don't know enough about its outlook of building this terminal near the border of their choosing, be it Bulgarian or Greek. Secondly, if the Greeks sell the infrastructure to the Russians or sign an agreement for, I saw a figure of $5 billion today or yesterday, to build a pipeline through Greece somewhere to Italy or to North, to the North. Would that derail ton up and top? Is there a direct competition and is the Russian strategy to kill the Azeri source of gas? And finally, what does it tell us about Gazprom as a company? It's all good ideas. I'll write some about some of them. What does it tell us about Gazprom? Gazprom is giving the last dividend was 4.2%. Yeah, it was close to 5% and it trades at four, the PE is four. It would be an attractive company if the strategy was good, but the strategy, as you're telling us, is horrible. Let me add to Ariel's compound question.  And aren't transit fees against the law in Europe, Alan? And Keith, you get the last question. My question is an easy one for you. An easy one. And that's, what are the chances of a European energy market? We've been talking about this for a long time. A lot of people are for it. You've got strong opposition by Hungarians and others. What are the chances of a real energy market, EU energy market? Ed just said, come tomorrow. Just to take Ariel's compound question. I think there are a whole range of questions about what the Greeks think they are doing. I mean, the essential point is, is the commission will insist on the application of EU law on the territory of Greece as it's a member state. The second problem they will have is that if it doesn't comply with EU law or there is commission proceedings against whatever they decide, there's going to be huge financing problems for whatever they want to produce, assuming they want to get any form of external finance to run it. So I think there are some real, there's all this bombastic we can do this, we can do the other, but actually, how easy is this going to be to get off the ground? And I think at the moment, I think there's a situation of flux of what exactly are the Russians really going to offer. I mean, one of the things, one of the perplexing questions about all of this is, which I've not understood for ages, I remember shutting up one debate I went to where there was just so many kind of pro-Russian groups in the audience and on the panel, it was crazy. And they were basically going on how dreadful it was that the OPAL pipeline, which is a connecting pipeline from Nord Stream into the German market, they could only have 50% capacity off and the evil European rules meant that they couldn't use the entire pipeline. And they had to give it to someone else. I said, well, there's no problem with this is you could just lift gas problems, export monopoly, and allow Novotek or Russian F to provide the gas instead. Now, of course, at which point, total silence. You could solve the problem yourself. And there is actually a sense in which, there is, you could have other Russian companies involved. And that would actually significantly weaken the ability of the EU to apply its rules. And I've never understood the internal dynamics in the Russian energy sector as to why they don't lift the export monopoly. I mean, they have to lift it entirely. They can do it by quota or whatever. It's absolute Russians, they sell all. They could do that. And it would massively reduce, it would significantly reduce a lot of their legal problems. But they've never done that. Let me add a couple of things. First of all, on the other Russian companies, one you'd really have to, there'd be litigation that would go on forever as to whether the Russian addition, whether these companies really independent and who in fact is controlling them. But back to Ariel's question of the Russians trying to kill TANAP and can they be successful. Nobody, there's one other country that I don't think really has come up today, which is Turkey. And I think it is highly unlikely that Turkey would ever allow Turkish Stream to ultimately interfere or kill Shaktanis and the TANAP pipeline. Turkey wants to get as much gas as it can and to transit as much gas as it can. It won't let itself get more, even more dependent on the Russians by not allowing Azerbaijani gas to go through. You've got to also recognize the very strong fraternal, if not fraternal relationship which sometimes has fraternal rivalries of, but that the relationship between Turkey and Azerbaijan which would be devastated if TANAP didn't happen and if Turkey just simply let Turkish Stream take place and in effect take the place of Shaktanis and TANAP. On Keith's question about the European energy market, it do come tomorrow at Atlantic Council, nine o'clock start, but it seems to me it's really very much a work in progress still, which they're trying to understand and maybe the commission itself is struggling with a vision of what that should look like, what role does policy play? What role does government play in investments? How does the private sector, the companies interact with this vision? I think happened to think the European Energy Union was a terrible name, but when maybe the vision is more a common market and energy union with some of the false signals previously sent about joint purchasing of gas and other similar notions. So I think we will clearly have to learn more as we go forward, which means that there's more room for people like CSIS to have meetings on the subject. Well, indeed, what I was going to say was that my simple view of it is that are we going to get to European energy markets? And I think the principal person who is achieving a European energy market for the European Union is Vladimir Vladimirovich Putin. Thank you for all your good work for European integrations. Can I, I'd like to maybe to close, I mean, I've been wrestling with this question for at least the last six years. And maybe Alan, if you could in 30 seconds answer this question, could you define what is a European integrated energy market? What does it mean? Okay. I am not sure, despite all the phrases that have been used and all the massive numbers of papers that all the analysts like myself and others and researchers have read in the field over the last decade and a half, I am not sure what it is supposed to mean. But let me just, if we can unpack it, you could say, well, is it the essential physical interconnection of the, let's start with gas markets. We're talking about gas, physical interconnection. We have got there, but we are certainly moving since 2009. Is it legal ability to move gas around while we're getting there with a third energy package? One of my points, I've just got a paper in the Atlantic Council, which we hopefully have shortly. And I have, one of the things I was, the point I make there is that although the third energy package is on the books in almost all member states, there is a serious lack of compliance with all of the EU rules, which needs to be put, to be sorted. And the other element of this is having sufficient alternative sources of supply. I suppose the other issue, which is often underplayed, is the building of sufficiently number of deep and liquid trading hubs. So you can actually have competitive pricing of gas. That's moving across to a trading hub model. Now, it already exists. It does exist in part of Europe. Northwestern Europe is essentially an open liberal trading market for gas. And it's, it doesn't, it's not theoretical. It exists now. The French, finally, because one of the other major barriers to European supply in Europe is between France and Spain. Largely about the French are terribly worried that gas to France will find the Spanish coming across the Pyrenees with huge amounts of cheap liquid natural gas. They've got the largest LNG capacity in Europe, about 60 billion cubic meters of LNG capacity. And actually that could provide gas all the way to Ukraine and help the East Europeans. But of course, the blockage there is the French. Now, they can only at moment export about 7 billion cubic meters of gas. And that could be another potential supply issue there. So there are all these political different issues across the continent. And one of the other points I think it's to make is that there is a terrible tendency to blame the Russians for everything. And there is actually... Well, why not? But actually the trouble with an integrate, the reason why the third energy package has not been applied across the whole of Europe and why a lot of interconnectedness has never been built is actually because a lot of domestic utilities work out is that free market liberal competition is great for consumers, but it's not great for utility companies and actually having a disconnected market where you go, okay, you do a great deal with the Russians and the Russians do really well out of it, but you do really well as well. And the only people get shafted are the consumers. And that's okay. And so that's part of the problem here is that you've also got utility resistance and all incumbent resistance as well as the Russian political games being played. I really want to thank you for that answer because I had just wanted to make sure that I was not totally stupid and missing some kind of magic formula as to what it all meant. Well, this has been fascinating discussion. Thank you, Alan, for coming from London and thank you, Ambassador Morningstar.


All right, Susan writes, question, question, question. Hi, Jonathan. This latest man I met online has been advised to the, has advanced to the phone call and wants to see me Friday. But he talks on the text all about sexual things. How do I respond to that? How do you respond? So you can say something like this, is it, I need your opinion on something. Let's use one of our techniques. Is it typical with men with small penises asking sexual questions without getting to know me? Is it typical of men with small penises do that? Just ask it as a question. Now I'm being absolutely rhetorical. Listen, anybody who leads with sex is not interested in a fully committed relationship. He's in that dysfunctional category of men, dysfunctional category of men that lead with sex. And by the way, I would totally say that to him.  Listen, folks, it's one thing if you're both flirting with each other and you're both mutually being sexual with one another. I am, I have no objection to that whatsoever. I am all four people flirting and being sexual with one another if they feel comfortable with one another. What I'm not a big proponent of is one person leading with sex and the other person isn't. So sometimes you gotta smack a dog in the nose by putting it out there.  I mean, really, do you think that works? You could block his phone number too. That's another thing. And you could do the polite lady-like thing. Thank you so much. I don't appreciate that line of questioning kind of thing.  I know I was once smacked upside the head not literally, figuratively. And it actually woke me up. So just, I like, by the way, I'm being totally tongue-in-cheek here but you could say, hey, is it typical of men with small penises to lead with sexuality? I wouldn't meet the guy, but that's just me. Thank you so much for that question. I really appreciate it and I hope it helped. All right, what would your advice be to a guy who wants to move in with you but he's worried that he will lose his identity and freedom if he does? Great question.  This is the mechanics to a healthy, happy relationship. Quite frankly, this would be a great book to read before you move in together. Listen, there is a restriction of freedom that happens when you move in with someone. That's natural. And if someone's not prepared for that, I can understand that. And maybe if you to live near each other and spend a little, maybe you practice by spending four days a week together first to get started. Maybe it's five days a week to get started but ultimately moving in with someone can be very problematic. And not that I have the answers for you today, I would Google what things to look out for when moving in with your boyfriend or girlfriend, okay? And start to address the problems before they happen. In other words, I want you to look at the street and if you see a hole in the sidewalk, rather than falling in because you're blind to it, book start to review what could go wrong and address that in advance. That's at least my suggestion to you is address the, now you don't even know what those potential problems are. For example, depending on the size of the place you might not have a lot of privacy. I know one couple that spends, they take the entire, each once a week they take an entire 12 hours out of the, they live together, this is a married couple but they take 12 hours outside of the home to do their own personal things without seeing each other and no text messaging, no telephone calls in between. One person has a hobby that they do another person has their yoga, I think they're a yoga instructor or something like that. My point is, is they build it into the fabric of their relationship so they have their alone time and that's critically important as well. In fact, this is one of the reasons why a lot of couples are doing what's called living together apart. In other words, they're not moving in together but they find homes very close to one another so they still have their own pad so they can chill and yet they spend quality time together as well. You have to do what's right for you but you might wanna Google living together apart. You might wanna talk about what the potential problems could be, address them in advance because the worst thing to do is go in there naively going and this is what you ladies so terribly do. But Jonathan, if we just love each other, magic fairy dust will make it all work out. Folks, magic fairy dust doesn't exist. Being intentional, coming up with agreements, compromising, that's what makes a relationship work in the long term, not the short run or for the long term and the short run thinking that love will solve the problem doesn't solve problems. Love is the icing on the cake of a relationship. At least that's my opinion anyway. Do you agree with me? Hit that thumbs up. All right, Coco, thank you for that question. I really appreciate it.


Hello, wiki-triers. Oh, there's Steven. Steven's here. He was awfully quiet in the chat while we were waiting. I know we were getting some touches. Yeah, we came in with a whopping two minutes to spare. Kathy's here. Hi, Kathy. I feel like I owe Kathy a response somewhere. If I do, Kathy, I'm sorry. I will get to you. I feel like she asked me a question somewhere, and I can't remember where it was. But I'll come back to it. Maybe she'll tell you. I always do. I hope so, for what it was. Now that's going to distract me. So you have to talk now, Aowyn. So what do you think it was you needed to answer Kathy for? Yeah, that's helpful. There's Kay. Hi, Kay. Kay. Kay, the biocheck lady. I wonder if anybody saw her. I bet that everybody that's in here already saw the presentation she did on Saturday. I started watching it. And then I was like, yeah. I started watching it, and I got distracted because I wanted to go play with biocheck, so I didn't ever get back to finish it. I know that surprises you, Aowyn. That's kind of shocking. It's shocking that you'd fall down any kind of rabbit hole every day at least six times. Yeah. There's Janine and Benjamin. Tommy said he was going to be here. He's always here. Actually, Benjamin's always here, too. And Steven. And I think Janine's bigger every other Friday. It is. I love it. I like that we have regulars. I can't tell how many. Oh, we have 10 people at the moment. Oh, we should have done. I forgot to play the intro. Oh, yeah. We need to come up with a Friday night intro, don't we? We do. Like with some romantic music and candlelight or something. Lots of hearts everywhere. Yeah, violin music. That would be fun. Steven's browser crashed. Oh, there you go. Thank you. Did you just put that up there, the banner? I did. Yeah, I did. Are you playing? Yeah. Oh, Kay just reminded everybody, Fold 3 is free for Memorial Day weekend. I forgot about that. That's awesome. Kay and her pretty puppy dog on her avatar. This is a pretty puppy dog. Yeah. Well, I don't really have anything exciting to talk about today because I didn't have time to update the stats this week. It's been a busy week. It has. Here Kay said, she fell down a rabbit hole, not Kay, Nancy, during the challenge. But for Friday night, she's found a date. Oh, right. And already connected him to the tree. Good job, Nancy. Thank you. I think I mentioned on Discord the other day that I found about 100 profiles that I had to open up. They had no dates and they were all private. So I opened them. They're going to get so mad at me. They're like, why? How are we supposed to make progress? Why do you do that? Like, it's just more that we get back. Way to set them back, Julie. Way to set them back. I know.  My dad does that for Memorial Day, too. My husband, he used to be a Boy Scout leader when my son was little. And so they used to go do that every year, too. It's kind of cool. So, Aowyn, what do you want to talk about? Should I bring up the free space page and see if anything looks interesting? If you'd like to. What should we talk about? Let's see. We did clear 18,000. Oh, yeah, you did go to Utah. How was Utah? It was fun. It was nice to see my husband's family, because we haven't seen them since we moved. That was good. Yeah, I bet. His mom cried a lot. Oh, when you had to leave. Like, every time she saw us. We couldn't leave.  I know. I was like, I'm so sorry we moved. Oh, I have a surprise. Good thing I went and looked at the stats. What's the surprise? Hang on, I'll put it in a banner. If I can get back over to the stream yard, here it is. Banners. Create a banner. Here's our new total, you guys. Hi, John Tyner. Ooh, great, go 19,000. 19,606. That's how many you guys have dated. Can you believe that? I know it's just a drop in the bucket, because we have a lot. But to me, that's a neat thing. I think it's awesome. More than there would be if we weren't doing this. Yeah, I think so. I noticed I was looking at the stats, and I noticed that during the cleanathon, we cleared something like 7,000 somehow. So that was very exciting. So this is John Tyner's first time to the live stream. He is in Ireland. Welcome, John. I knew some clever Irish comment to make for you, but I'm not that clever, so I can't. I tried, but I haven't either. Yeah, maybe you could give us something that would be appropriate the next time you're here, and then we'll remember. So that would be fun. I don't speak Irish. Celtic, right? Did I get that right? I'm going to be really cautious there, because there is a discussion about it in G2G about languages in Ireland and Wales and stuff. And it was some stuff I had never heard before, so I just want to not cause more controversy. Yeah, I'm happy to be educated. So anybody throwing anything out here? He found us through Devon's challenge, the true challenge. Yay, welcome. Awesome. That's awesome. Yeah, that was a fun week. They're busy over there working away right now, too. I check in on that server every once in a while just to see how things are going. Oh, Nancy wants to know how I find the number that we fixed. Well, usually I put it on our free space page. Otherwise, it's on a spreadsheet that I keep that Alash helps. He passes me information. So it's not open to the public. But I do put it on the free space page. I just haven't gotten there yet this week. Oh, here. John says Gaelic, or I assume that's another spelling of the same language. I'm not going to try to pronounce it properly, because I won't. Cool. Yeah, it's awesome. And Sharon Haynes, I don't recognize her name from Alabama. Whoops. It jumped on me. It doesn't sometimes. Welcome, Sharon. And there's Robin. And Nancy said, oh, it did it again. Oh, that's Irish for Gaelic. OK, gotcha. I'm not even going to try to say this. I can't do it. I'm sorry. I don't have the phonetics down. But Nancy, the number that I put up was it's not just for Friday, date night, because other people are always working on the undated profiles to the Profile Improvement Project. I think works on them, right, Ewan? I believe so. And just anybody randomly can pop into the Dated Doctors reports and work on the undated profiles. But we just make a concentrated effort through Friday, date night. So we benefit from what other people are also doing, the people who don't participate with Friday, date night. But we love having everybody here. It's just I've gotten very fond of our Friday, date nighters. I know. Such a nice group of people. They are. We have our regular crowd. And for those of you that might be new, I know. For those of you who are new to Friday, date night, you are welcome to join us over on the Wiki Tree server on Discord. We have a channel set up, and we just kind of chat there and keep each other company or ask questions and all that fun stuff. Just a fun way to spend a Friday for afternoon. It's like 3 o'clock here. But the timing works better if we have it in the afternoon. So that's fun. Anything else? It's only been 10 minutes. I think that's good. It doesn't have to be long. No, I know. Is Molly nearby? Can you? Can be a quick date. Say hi to us. You want me to go get her? Molly. Not if she's sleeping. She's fine. Hold on. We have to say hi to Aowyn's puppy. She's not a young puppy. Oh, here. And as if on cue, Joey came in because he thought that we were talking about him. Hi, Joey. Say hi. Say hi. It's Friday night again. Somehow he knew that she was going to go get Molly and bring her back. So he had to run in here and say hey. Aowyn, look who showed up. As soon as I said something about Aowyn has a puppy, Joey showed up. Joey. Hey, meet this Friday night, people. There she is. Oh, was she sleeping? No, she's sleeping on the couch. We can't see her face very well because she's so dark. I could see her little eyes. Hi, Molly. Go find Jason. OK, did we find out what time? Oh, it's 9 o'clock in Ireland. That sounds, yeah, I thought that you guys were about six hours ahead of us. Who said something about Willow? Karen, I love the name Willow. Oh, Karen Butler. Yes, Karen is a new grandma. That's exciting. She has a new baby granddaughter named Willow. Congratulations, Karen. That's fantastic. And I think that she'll get to meet her soon from what I last heard, she'll be coming home. So that's exciting. Oh, I forgot, Kay's dog is also named Molly. Oh, cool. I forgot about that. That's fantastic. And Nancy has another granddaughter coming too. So congratulations. We'll be looking for pictures when they arrive. Yes, please. All right. You guys, I'm just going to let you go date profiles. Go date profiles. I have nothing exciting today. It's rainy and cold here. It's windy. It's a good day to curl up on the couch and date profiles. So I'm going to go do some of that myself. How about you, Aylen? I'm going to finish what I was doing with the Belgium project. And then I will go through. Oh, there you go. I would like to. I have five things I need to do before I can go do that.  Well, let's go do things then. All right, let's. Thanks for popping in, everybody. We love having you here. And if you're popping in later, I don't know if anybody ever watches these later. It's not very informative. But we like seeing you. So glad you're here. And we will catch you in two weeks for Friday date night. I hope. I got to check the calendar. I know there's something. I think there's a time coming up where Friday date night is going to have to be skipped, or at least video will. So we'll see. It'll be on autopilot that week. All right, everybody. OK, have a good weekend. And we'll see you hopefully in two weeks. Bye.