Translated material
Miller held the test
Gas deficit in Ukraine has reached 18 billion cubic meters
Gazprom continues to take a hard line in relations with Ukraine. The head of Naftogaz, Alexey Ivchenko, who arrived in Moscow yesterday for negotiations, was confronted with a fact: the head of Gazprom, Alexey Miller, informed him of a unilateral decision taken on the fate of 7.8 billion cubic meters of Gazprom gas “stuck” in Ukrainian underground storage facilities. The concern considered that it had paid for transit services for 2005 with this gas and carried out the corresponding offset. Thus, this year Naftogaz will receive only 15 billion cubic meters of gas from the concern. According to Vremya Novostei, after this the “hole” in the balance of gas consumption in Ukraine reached 18 billion cubic meters of gas. Gazprom's negotiating position on this issue is its readiness to close this gap at European prices - $160 per thousand cubic meters. Thus, the starting price for resolving the gas issue for Kyiv reached $2.9 billion. And this does not take into account the $600 million in trade debt to Turkmenistan.“I would like to note that the Ukrainian side recognized Gazprom’s rights to this gas, but the most important thing is that what is being proposed today does not suit us. We are asked to take this gas evenly during the winter, and this undermines the very principle of using gas in underground storage facilities,” Mr. Miller said yesterday on the NTV channel. -- We need gas in underground gas storage facilities for use in peak situations. When, for example, it is cold in Western Europe, our customers ask for additional gas. But, unfortunately, it looks like when we need gas, Ukraine cannot give us this gas.”
After this, Alexey Ivchenko spoke in front of the cameras, saying that he did not agree with Gazprom’s unilateral decision, after which he uttered an ambiguous phrase: “We propose to count this gas against the export of Russian volumes to Europe.” It was not possible to obtain an explanation of the position of the head of Naftogaz yesterday, as Constitution Day was celebrated in Ukraine.
A source close to the negotiations claims that hints about replenishing Ukraine’s gas balance using “old methods” have already been made. But the resumption of unauthorized gas withdrawal from Gazprom’s export flow may have too far-reaching consequences for the “orange” government. Therefore, the reality of this threat is still not very credible. At least for now.
Let us recall that in February 2004, Belarus, with which there were also fierce negotiations on the price of gas, attempted to “steal” from Gazprom’s export volume. The Russian monopolist then completely stopped gas transportation through Belarus for about a day, which caused a slight panic among consumers. However, that resonance, as well as the contractual consequences for Gazprom, are not commensurate with the possible shutdown of gas supplies through Ukraine, through which almost 10 times more is transported than through Belarus. In addition, it is not very clear why the Ukrainian side does not agree to a completely peaceful offset ($50 each), if this gas is in the underground gas storage facility and it can easily be used to compensate for the lost barter payment.
After Alexey Miller informed his colleague about the test, a constructive dialogue could no longer happen. Mr. Ivchenko went to Moscow, among other things, to agree on the purchase of 8 billion cubic meters of gas, which until yesterday Naftogaz (at least according to his previous statements) was not enough to close the balance sheet hole. A couple of weeks ago in Kyiv, the deputy chairman of Gazprom, Alexander Ryazanov and Alexander Medvedev, promised to sell an additional 5 billion cubic meters to Naftogaz at negotiated prices. Yesterday Mr. Ivchenko was told that the Russian concern is ready to supply this gas at European prices. In addition, it turned out that even without gas “stuck” in underground gas storage facilities, the gas deficit in Ukraine this year is not 8, but 10 billion cubic meters. And also the fact that it was not possible to find 3-5 billion cubic meters in Central Asia, which means that we again need to negotiate with Gazprom.
“For dessert,” the parties left the conversation about gas supplies next year, or rather, they exchanged unchanged negotiating positions. Gazprom is firmly committed to abandoning barter, paying for transit in cash and selling gas at market prices. Naftogaz is ready at any cost to maintain the existing scheme, which, although fixed until 2013 in an intergovernmental agreement, involves the annual approval of parameters for volumes, gas prices and transportation tariffs.
It is obvious that the parties have driven each other into a dead end, and it is not easy to get out of it. At the same time, Gazprom managed to seize the negotiating initiative. And this is a significant foundation before 2006, when Gazprom and Naftogaz will have to discuss cooperation after the end of the Ukrainian-Turkmen contract (which now provides 50% of Ukraine’s gas needs). From 2007, Kyiv will be forced to purchase the entire volume from Gazprom, and take precisely Turkmen gas contracted by the Russian concern until 2028. Among other things, this means that all of Turkmenbashi’s price requests (negotiations on the price formula will be conducted until approximately the middle of next year) will be fully satisfied at the expense of Ukraine.
There is, of course, a fantastic scenario for the development of events, which assumes that Ashgabat will conclude a new long-term contract with Kiev. Mr. Ivchenko promises to do this in September during Turkmenbashi's visit to Kyiv. However, Saparmurat Niyazov's arrival in Ukraine looks even less likely than the signing of such an agreement.