The Price of the Vote
// Referendum on NATO will cost Ukraine $130 per 100 cu. m.
Kommersant has learned from sources in the government and in Gazprom that Moscow expects to complete gas negotiations successfully when the prime ministers of the two countries meet in Kiev on October 24. The price of the natural gas will be under $130 per 100 cubic meters, if Kiev agrees to a package of Moscow's demands, including economic and political demands.
During Russian Prime Minister Mikhail Fradkov's visit to Kiev on October 24, conditions for the delivery of gas to Ukraine in 2007 will be discussed. A source close to Gazprom says that big hopes are being placed on that meeting. A few days ago, Ukrainian Prime Minister Viktor Yanukovich said that draft federal budget had been written based on a gas price of $130 per 1000 cu. m. and everything will be put in writing during the meeting of the Russian-Ukrainian trade and economic commission in Kiev on October 24. Fradkov will make a one-day visit to Kiev on that date.
Kommersant has learned that Moscow is offering Kiev a package deal. A high-placed source in the Ukrainian leadership says that Ukraine is promising several concessions to Russia in exchange for gas. The first is that a national referendum on NATO membership is to be held in the near future, which is intended to put an end to all thoughts of joining that organization.
Holding a referendum on NATO was one of the basic positions of Yanukovich's Party of the Regions. Then a clause on a national vote on NATO membership was included in the so-called Universal signed on August 4 by the president and the leaders of the anticrisis coalition. Polls show that about 60 percent of Ukrainians are against NATO membership and the results of such a referendum today would be completely predictable. Thus Moscow is blocking Ukraine's way to NATO, at least for several years, by demanding a referendum.
The second demand mentioned by the source is that Live leave the Russian fleet based in Sevastopol alone until 2017, as they had agreed, and possibly even prolong the agreement. Moscow and Kiev concluded a 20-year agreement on the Black Sea Fleet in 1997. But a scandal has been simmering around the fleet for more than a year now.
The third condition on the deal is a Ukrainian guarantee to cooperate with Rosukrenergo for at least five years, as agreed on, without initiating a reconsideration of that agreement. Fourth, Kiev has to promise to receive gas from Turkmenistan exclusively through Russia. Finally, Ukrainian must not change the transit price for Russian gas.
Those proposals were discussed at the meeting between Russian President Vladimir Putin and Yanukovich in September. At that time, Russian Ambassador to Ukraine Viktor Chernomyrdin told Kommersant that a price of $130 per 1000 cu. m. was being discussed.
The elements of the deal are at different stages of advancement. Yanukovich met with First Deputy Prime Minister of Russia and chairman of the board of directors of Gazprom Dmitry Medvedev in the Crimea on October 15 and discussed options for gas deliveries between 2007 and 2010. That was reported by the press service of the Ukrainian cabinet. The results of the negotiations were not reported, however. It is also known that Ukrainian Minister of Fuel and Energy Yury Boiko met with Russian Minister of Industry and Energy Viktor Khristenko in Moscow to discuss state support for the gas business from both sides.
Gazprom is not commenting on information about the price of gas to Ukraine. The Swiss company Rosukrenergo, 50 percent of which belongs to Gazprombank and 50 percent to Dmitry Firtash, stated yesterday that contracts for 2007 are at the stage of signing.
On the Ukrainian market, they called the economic conditions on the deal “maintenance” of the current situation. “The agreement of January 4, 2006, was made for five years, so obviously it is a matter of fulfilling current obligations,” a Rosukrenergo spokesman in Kiev said. A source at Naftogaz Ukrainy agreed, saying that “Russia has proposed that Ukraine preserve the existing procedure for gas supplies.”
Minister Boiko stated at the beginning of this month that the transit price for Russian natural gas across the territory of Ukraine would be kept at $1.60 per 100 cu. m. per 100 km. in 2007, which is significantly lower than world rates ($2.40-3.20) The Ukrainians decided on that in connection with the replacement of Russian gas by Central Asian gas. The fee for the transit of Russian gas in Ukraine mirrors the fee for the transit of Central Asian gas in Russia. “After the conversion to Central Asian gas, it will be unprofitable for Ukraine to change any transit fees for Russia. That would lead to a direct loss,” explained president of the Association of Natural Gas Traders Roman Storozhev. “Therefore, that Russian demand has been met.”
Oleg Gavrish, Kiev; Natalia Grib
All the Article in Russian as of Oct. 20, 2006
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