Operation Intermediary
Russia has not turned off the natural gas supply to Ukraine. A new procedure for maintaining gas relations between Moscow and Kiev was worked out at the meeting between Russian President Vladimir Putin and Viktor Yushchenko. In return for a larger share of the retail market in Ukraine, Russia has agreed to remove “extraneous” structures, such as those of Dmitry Furtash, from the system. Now Gazprom will work only with Naftogaz Ukrainy and leave disputes over gas flows from the Ukrainian side to that country's politicians.
Gazprom was on high alert yesterday after lunch, waiting for the call from the Kremlin, where the presidents of Ukraine and Russia were deciding the future gas relations of the two countries. If the negotiations failed, Ukraine's gas supply was to be turned off at 6:00. They say at Gazprom that an order arrived at that time to “suspend temporarily the reduction of supplies.” The “heightened security” regime for the technical reduction of supplies was completely stopped only three hours later. The details of the agreement became known in that time.
Gazprom CEO Alexey Miller reported that Naftogaz Ukrainy will begin repaying its $1-billion debt for 2007 tomorrow. No agreement was reached on deliveries of $500 million worth of Russian gas this year. Those negotiations are to be completed by the end of the month. The Ukrainians insisted that they consumed only cheap Central Asian gas from underground reservoirs and did not receive any expensive Russian gas from the pipeline system. Before the end of the week, the companies will sign a package of agreements stipulating the new procedure for organizing gas deliveries to Ukraine. As Ukraine, and especially new Prime Minister Yulia Timoshenko, demanded, only Naftogaz Ukrainy and Gazprom will be involved in the deliveries. The second main Ukrainian demand was also met: the price for gas was maintained at $179.50 per 1000 cu. m.
It was the delivery procedure that lie at the heart of the current conflict with Ukraine, although its formal cause was debt. The center of the procedure that was set up on January 6, 2006, was the Swiss gas trader RosUkrEnergo (founded in 2004, 50 percent belongs to Gazprom, 45 percent to businessman Dmitry Firtash and 5 percent to Ivan Fursin). The company bought Central Asian gas from Gazprom Export at the border of Turkmenistan and Uzbekistan (for an average of $140 per 1000 cu. m.) and transported it under an agreement with Gazprom to the border of Russia and Ukraine. Up to 55 billion cu. m. of gas passed through RosUkrEnergo per year. It was purchased at the Ukrainian border for $179.50 per 1000 cu. m. by Ukrgaz-Energo, which is owned in equal shares by RosUkrEnergo and Naftogaz Ukrainy. Ukrgaz-Energo cleared the gas through customs, paid 20-percent VAT and sold 25 billion cu. m. of it to subsidiaries of Naftogaz and 30 billion cu. m. to the final consumers at $239 per 1000 cu. m.
The new procedure will be the same, but RosUkrEnergo and Ukrgaz-Energo will be replaced by companies set up equally by Gazprom and Naftogaz. Thus, the main casualties of the new agreement are Firtash and Fursin. Gazprom wins too, formally, since its share on the Ukrainian market and thus its income from it will double . Timoshenko has been seeking the removal of Firtash and Fursin since before her election as prime minister in December.
Gazprom stopped objecting to the liquidation of the intermediary in the autumn. The chairman of the board of the monopoly, first deputy prime minister and possibly future president Dmitry Medvedev said that in an interview with the German ADS television. There was a problem with Ukraine's gas debt then too, and Medvedev hinted unambiguously that it could be partially the fault of the intermediary. Kommersant sources close to Gazprom and RosUkrEnergo say that the accounting procedure for that debt was non-transparent and perhaps was one of the causes for the new debt to arise. At the end of last month, Semen Mogilevich, is considered one of the organizers of that procedure, was arrested. At the same time, a Gazprom source says that the same people from the monopoly, such as Gazprom board member Konstantin Chuichenko, will be involved in the new intermediary company, which will begin operations in March or April.
Now Russia has made the delivery procedure completely transparent, leaving the competition for the margin from sales of the gas flow in Ukraine to Yushchenko and Timoshenko, between whom there is no agreement on the issue. That battle may begin very soon. On Friday, according to a source in the Ukrainian government, the country's National Security and Defense Council plans to consider taking over supervision of Naftogaz, which would mean subordinating the company to the president. Now Naftogaz is run by managers loyal to Timoshenko. According to Yury Korovin, director of the Ukrainian gas trader Olgaz-Invest, the main reason that Gazprom agreed to exclude RosUkrEnergo from the procedure was that the monopoly was offered 50 percent of income from the sale of gas on the domestic market. Korovin said that the profit from Ukrgaz-Energo last year was $183.5 million, of which Gazprom received $45 million. This year, therefore, the monopoly can expected at least $90 million. Also, Korovin thinks, Gazprom will be able to raise prices faster if it has a direct relationship with Naftogaz. “Now there is no reason to hold down the price artificially to maintain RosUkrEnergo on the market,” he observed.
However, Danil Shevelev, director of the Ukrainian gas trading company United Gas Group, suggests that Gazprom decided to change the intermediary itself. “First there was the arrest of Semen Mogilevich,” Shevelev said. “But I think the situation did not end there. Legally, they have an agreement with Gazprom Export, which has yet to be dissolved.” Shevelev thinks that, if Firtash decides to defend that agreement in international court, he could create definite problems for Naftogaz and Gazprom. Furthermore, according to Shevelev, a concession is likely. RosUkrEnergo will probably be preserved on the market for some time as the exporter of Central Asian gas to Europe.
Natalia Grib; Oleg Gavrish, Kiev
All the Article in Russian as of Feb. 13, 2008
|
