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Gazprom has virtually given Ukrainian President Viktor Yushchenko an ultimatum claiming share in the countrys gas transportation system.
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Dec. 14, 2005
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Gas Main Is Main
// Russia has declared what it wants from Ukraine
Friendship of Nations
Gazprom officially explained reasons for the emerging gas war with Ukraine. The companys CEO Alexey Miller said yesterday a compromise with Ukraine (i.e., gas supplies at rebate prices) is possible only if the Russian gas monopolist gets a stake in Ukrainian gas-mains. Gazprom also promised to protect Europe from consequences of Ukraine's stubbornness. The Russian gas major announced the setting up of a headquarters to protect its clients in the EU.
Late last night, Alexey Miller slammed Ukraine in an interview with Russia Today which had gone back on air, after broadcasting of the TV channel had been disrupted. As for a compromise [with Ukraine], it is certainly is possible. The Ukrainian party realizes it. It is the matter of the gas transportation consortium. An agreement signed by Russia, Ukraine and Germany to carry out the project jointly is well known. New Ukrainian authorities have virtually given up the project as no progress has been made here in the last year, the head of Gazprom said.

Summer 2004, Gazprom and Naftogaz agreed to set up International Consortium on the Creation and Development of Gas Transportation System of Ukraine. The company with the authorized capital of 35 million was supposed to become the operator of shipments of the Russian and Central Asian gas to Europe through Ukraine. Gazprom transferred its share ($17 million) by the end of 2004, and all documents for the registration of the joint venture were prepared by this spring. Yet, the consortium never started working as Ukraines new authorities found it unreasonable to transfer a share of Ukrainian gas mains to the Russian company.

Alexey Miller mentioned the conditions under which Gazprom is willing to supply Ukraine with gas for relatively low prices. Cooperation in gas transportation sphere would help us find some balance of interest, which is now the case with Belarus because gas-main on the territory of Belarus [Yamal-Europe], unlike in other transit counties, belongs to Gazprom and the ground beneath it is on a long-term lease. Besides that, we are also negotiating over Beltransgaz, the Belarusian gas transportation system, for Gazprom to obtain the gas transportation networks.

Russian Industry and Energy Minister Viktor Khristenko received Ukrainian Fuel and Energy Minister Ivan Plachkov the day before. The press service of the Russian ministry told Kommersant that no comments would be released until the talks were over and a number of documents for the gas industry between Russia and Ukraine were signed. But Kommersant found out that Ukraine had agreed in Moscow to consider by the end of the week a new long-term contract for Russian gas deliveries to the country and the following transit to Europe setting the monetary form of accounts, instead of exchange.

Gazprom and Naftogaz Ukrainy are presently bound by an agreement as of June 21, 2002, on the amount and terms of the Russian gas transit for 20032013 which stipulates for supplies at $80 per 1,000 cu. meters and the transit tariff of $1.75 for the transportation of 1,000 cu. meters for 100 km. The agreement also envisages lowering coefficient fixing the gas prices at $50 and the transit tariff at $1.09.

A statement of the Ukrainian President Viktor Yushchenko appeared on the official presidential website late Monday night. Ukraine is ready to settle accounts for gas on exclusively market terms but with a gradual transition period. Ukraine has given state guarantees for the transit to be executed, and the guarantees are absolute, the statement runs. Valery Yazev, the chairman of the Russian State Dumas Energy, Transportation and Communications Committee, said yesterday that Ukraine had suggested that Russia supply it in 2006 with 17 billion cu. meters of gas at $50 per 1,000 cu. meters and 8 billion cu. meters at $80-82 with a further price rise for the gas supplied within the quota up to $90-96 in September.

In response, the Russian Industry and Energy Ministry posted information about the talks on its official website quoting Khristenko as saying that the quick pace of the negotiations makes it possible for us to prepare by January 1, 2006, a required package of documents to regulate relations between our countries in the gas sphere.

However, long before the statement of Gazproms head, Millers spokesman Sergey Kupriyanov called a step-by-step rise of gas prices unacceptable, an attempt to drag out the negotiations. This offer does not answer the question of who is going to compensate Gazprom for lost profits in this transitional period. When it will happen and from which sources? Gazprom stated later that night that it was set to create a headquarters to provide continuous gas deliveries for European customers through the territory of Ukraine and demanded an immediate signing of the contract to transport the Russian gas at European transit tariffs of $1.75.

Sergey Kupriyanov commented on yesterdays talks in Gazprom with the Ukrainian delegation (Ukraines Ivan Plachkov left for Turkmenistan to negotiate with the countrys president Saparmurat Niyazov) and informed that if the contract is not signed, gas shipments to Ukraine will be suspended from January 2006. Ukrainians tried to comprehend yesterday causes of such an unbending stance of Gazprom. Mikhail Volynets, a member of the Ukrainian Supreme Radas Fuel and Energy Committee, told Kommersant that once Yulia Timoshenko demanded that Gazprom give back to Ukraine a stake in Rosukrenergo [the operator of Turkmen gas supplies to Ukraine set up by Gazprombank and Austrian Raiffeisen Investment], Vladimir Putin came forth with claims for gas prices. Gazprom and Gazexport denied their relation to the Ukrainian share of Rosukrenergo.

The gas attack on Ukraine has already made the local authorities raise export electric power tariffs. What is more, Gaz Ukrainy, a subsidiary of Naftogaz, said that it had cut off gas supply for 120 enterprises with low accounts for natural gas.

Nataliya Grib

All the Article in Russian as of Dec. 14, 2005

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