Shutting Down the Valve
// Ukraine is trying to highjack Russian gas
Today, Ukrainian Economic Minister Ivan Plachkov will bring to Moscow a new proposal for a trade regime starting from Jan. 1. Ukraine offers in the first half a year of 2006 to pay $80 for 1,000 cubic meters, by raising the transit tariff 60 percent. Otherwise, Ukraine will be taking 15 percent of the gas, which is being transported through the country's territory. The TV show is already being prepared showing the closing of the valve in Ukraine. This show is being considered as response to Russian TV auction of Krivorozhstal, which was held in Ukraine this summer. Russia and Ukraine are ready for the TV show. They are continuing the confrontation and undermining of coming negotiations.
Yesterday started from the meeting at Ukrainian President Office. Despite the participation of the head of Security Council Anatoly Kinakh and Ukrainian Foreign Minister Boris Tarasyuk, the conversation was about pure economic matters – about the overall position of Ukraine in negotiations with Gasprom (another round is supposed to start today) and about the work regime of Ukrainian industry and residential complex if Gasprom will stop the gas supply to Ukraine in order to maintain a working pressure in the system of underground storages of the country. Gas to the Slovakian border comes from these storages.
At the end of the meeting, Ukrainian Prime Minister Yuri Ekhanurov and Minister of Fuel and Energy Ivan Plachkov explained the situation. It looks like Ekhanurov presented his program of maximum goals. According to him, starting from Jan. 1 there is no grounds to consider existing agreements between Ukraine and Russia for gas transit and supply as expired. It means that the supply price should remain at $50 per 1,000 square meters, and the price of the transit -- $1.07 per 1,000 cubic meters for 10 kilometers. The price formula of transit and supply should be established during the negotiations with Gasprom before the end of the year. After that, it would be the time to talk about concrete prices using this formula. Before that, the Ukrainian Prime Minister said, Ukraine during the transit of gas through its territory has a right to take 15 percent of pumped gas as a payment for the transit. It is goes along with the contracts between RF and Ukraine, which were signed in 2005. The premier again confirmed that Ukraine guarantees the transit of the gas through its territory.
Plachkov had a minimalist program. According to him, new prices for the supplies should be introduced gradually during the first six months. In the first part of the year Ukraine is ready to pay $80 for 1,000 cubic meters by raising tariff for transit up to 1.75 percent. It is equal to about to 15 percent of loss for Gasprom during the transit.
According to Plaachkov, the price increase to the "European level" should be started in 2009. He explained the necessity of "gradual" increase by technical unpreparedness: allegedly, there are no gas meters at the border of Ukraine and Russia. Plachkov also explained that the contracts for the gas supply to Ukraine from Turkmenia in 2006 was signed (that means that theoretically Ukraine can hold gas blockade up to four months). However, he refused to name the price of the contract. In the same time, Plachkov could be understood that Gasprom would agree to discus this and the minister is going to bring this plan for today's Moscow's negotiations.
It is doubtful that the minister will be met cordially. Already several hours after Gasprom and the head of the Russian Ministry of Industry and Energy Viktor Khristenko rejected both programs. Sergey Kupriyanov, Deputy Director of Information Department of Gasprom, said that if Naftogasa of Ukraine will take 15 percent of gas, Gasprom will consider it as a theft. And if the contract will not be signed before Jan. 1, Gasprom will shut the gas supply to Ukraine. Khristenko rejected a readiness to discuss gradual increase of prices for Ukraine. He stated: "The switch to market relationship does not require any technical preparation." According to him, Russia and Gasprom will not make any new proposals to Ukraine about the gas. It means that Ukraine should agree for supplies with a price $220-$230 per 1,000 cubic meters with increase of transit charge up to $1.75 for 1,000 for 100 kilometers, or should stop to consume gas. There are no doubts that such hard position will lead to shutting down the gas supply.
According to Kommersant, Gasprom offers media, including central TV channels, to show a procedure of closing the pipe in the gas distribution station in Kursk and in Central Control Room of Gasprom in Moscow. Kiev is also getting ready for a shut down. Yesterday Energy Company of Ukraine announced about coming within next two week cancellation of service for the ten largest delinquent customers, who do not make timely payments for gas and electricity. The company explained that by a new regime of economy for energy sources. Among the delinquents there are Concern Stirol and Sumikhprom, Pobuzhsky ferro-nickel plant and other companies that are part of the largest commercial gas consumers in the country. Krivorozhsky Mining Plant already was cut off from gas supply and limited in electric energy. The company is a large supplier of ore for Krivorozhstal. It owes already about $100,000 in energy bills.
The "regime of hard economy" most likely will allow Ukraine for some time to continue to pump gas from 18 underground storages facilities to the border with Slovakia and cover Gasprom contracts with Western European countries. This time is dropped from four weeks to five days. The gas was pumped into these storages in the summer of 2005 and belongs to Gasprom. After that, Ukrainian automated systems will shut down gas supply to EU - if by that time, Gasprom and Naftogas of Ukraine will not come to an agreement.
Dmitry Butrin, Nataliya Grib
All the Article in Russian as of Dec. 28, 2005
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