A modest share

Gazprom estimates earnings from supplies to Ukraine

Representatives of the Ukrainian government and the management of RosUkrEnergo continue to publicly justify themselves regarding the recently concluded contract for gas supplies in 2007. Prime Minister Viktor Yanukovych once again stated that abandoning the January agreements would lead to an even “greater crisis” than there was last winter. And the co-director of RUE on the part of Gazprom, the head of the legal department of the Russian monopolist, Konstantin Chuychenko, told how the wholesale price - $130 per thousand cubic meters - was formed on the Russian-Ukrainian border. Of the $29 difference between the price of purchasing Central Asian gas from Gazprom (it is known that Turkmenistan supplies gas for $100 to Gazprom, which gives it to RUE with a symbolic markup of $1) and resale in Ukraine, you will have to pay for the services of transit countries "about $25."

He estimated the gross margin at $5 (although in reality it turns out to be $4). “This is enough,” says Mr. Chuychenko, “since RosUkrEnergo has insignificant fixed costs.” A trader can afford such “altruism” in wholesale relations with Ukraine. Firstly, because it has the opportunity to sell part of the gas purchased in Russia and Central Asia on European markets with much greater profitability. Secondly, all imported gas is sold to Ukrainian end consumers (industrial enterprises and housing and communal services) through the company Ukrgazenergo, in which RUE owns a 50% stake. That is, the Swiss trader receives about half of the profit from gas supplies already on the domestic market of Ukraine.

“We pay the company (RUE. - Ed. ), which Gazprom authorized to supply us with gas and which was given all the powers by Ukraine. The powers were given by our predecessors,” Mr. Yanukovych said in a recent interview. - Now it is impossible to destroy this contractual base. If we try, we could end up with a bigger crisis than the one we had at the beginning of 2006.”

Mr. Chuychenko explained to the Swiss newspaper Neue Zurcher Zeitung the purpose for which Gazprom attracted RUE as an intermediary (previously, representatives of the concern claimed that this company was introduced into the gas business by the Ukrainian government, which at the end of 2004 was headed by the same Viktor Yanukovych ). Through this company, Gazprom managed to enter the Ukrainian gas market, and also put an end to the practice of unauthorized withdrawal of natural gas from the main gas pipeline to Europe in Ukraine. Thanks to RosUkrEnergo, which has filled almost a third of Ukrainian underground gas storage facilities with its gas, Gazprom is much better aware of what is happening in the gas transportation system.

In addition, the Russian concern managed to shift a significant part of the risks arising in relations with Ukraine to RosUkrEnergo. According to him, now Turkmenistan sells its gas only to Gazprom, which sells it to RUE. The organization of gas supplies to Ukraine through this trader excluded Ukraine from purchasing gas directly from Central Asian producers, which would have left Gazprom only a “modest” transit fee. Now a share of the “modest” margin will be added to the “modest” transit rate. That in 2007, with the supply of 55 billion cubic meters of gas (minimum volume), should bring about a quarter of a billion dollars. In order to get a share of this amount (and also formally gain a foothold in the Ukrainian market), Gazprom had to share with its partners in RUE (Ukrainian entrepreneurs Dmitry Firtash and Ivan Fursin) profits from the export of Russian gas to Europe.

In 2006, the trader will purchase about 6 billion cubic meters of Russian gas from Gazprom at $231.5 per thousand cubic meters for resale in Romania, Poland and Hungary. For the transit of a thousand cubic meters through Ukrainian territory you will have to pay 15-16 dollars (1.6 dollars for every 100 km). The price of gas on the border of these countries is 270-280 dollars per thousand cubic meters. That is, Gazprom will give at least $70 million of “its” profits to other RUE shareholders.

In addition, it is unknown how Gazprom will receive its share of the trader’s profits. According to Vremya Novostei, the parties have not yet agreed on the issue of dividing the $700 million earned by RUE in 2005. It is this problem that is slowing down the process of re-registering 50% of the trader’s shares from Gazprombank to Gazprom.

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The Cabinet of Ministers of Ukraine instructed the Ministry of Fuel and Energy, Naftogaz of Ukraine and Ukrtransnafta to develop a feasibility study for projects to diversify oil supplies by 2008. According to the program for diversifying sources of oil supplies to Ukraine until 2015, approved by government decree of November 8, the ministry and Naftogaz of Ukraine were instructed to conduct negotiations with Azerbaijan, Georgia and Russia on the supply of Caspian oil and transit to European countries by 2009. Negotiations are envisaged with Kazakhstan on stabilizing the volume of oil transportation through the territory of Ukraine, and with Iraq and Turkey - on organizing the supply of Iraqi oil through Turkish territory to the Black Sea ports. INTERFAX

Alexey GRIVACHS