German Chancellor Angela Merkel said on Tuesday that plans for a controversial second underwater pipeline to bring gas from Russia could not go forward without Ukrainian involvement in overland transit.
"A Nord Stream 2 project without clarity about the Ukrainian transit role is not possible," Merkel said, after talks in Berlin with Ukrainian President Petro Poroshenko.
The German leader said the pipeline plans, which have long thrown a wrench in bilateral ties, had played a big role in their discussions.
In an interview with German business daily Handelsblatt on Monday, Poroshenko urged Berlin to abandon plans to build Nord Stream 2, saying it would enable an "economic and energy blockade" against Ukraine and blasting it as "political bribe money for loyalty to Russia."
Merkel has long called Nord Stream 2 a purely "economic project" with no need for political intervention. Her comments mark a significant shift from that stance.
She said that in her talks with Poroshenko "I listened closely to the concerns of Ukraine."
"The fact is that we cannot allow that, with Nord Stream 2, Ukraine would have no significance at all any more with regard to gas transit," Merkel told reporters at a joint press conference.
She noted that while there would "always be dependence on Russian gas," Ukraine relied heavily on income from transit fees.
The pipeline as planned would double the amount of Russian gas arriving in the European Union's most powerful economy via the Baltic Sea - without transiting Ukraine - by late 2019.
Authorities in Germany issued the final permits needed for construction of Nord Stream 2 on its territory and in its waters to begin last month, although other nations' green lights are still needed.
But "the Ukrainian transit pipeline is much cheaper and can be modernised cheaply and easily," Poroshenko insisted in the Handelsblatt interview.
He accused Russia of being an "extremely unreliable partner" in energy provision, pointing to state-owned energy firm Gazprom's refusal to pay Ukraine billions of euros after shutting off gas supplies in the middle of winter.