Germany out so far
On February 7, Kyiv received Russian vice-premier Viktor Khristenko known for a tough negotiating style. The purpose of the visit was to finalize the gas consortium deal. Ukrainian sources take a more down-to-earth view of the first session of the gas transit consortium’s supervisory board than the Russian media which had reported that the board would discuss drafting the feasibility report and the business plan for this organization. The former claim the agenda only included such routine items as the staff and the estimated budget of what is known as International Consortium for the Management and Development of Ukraine’s Gas Transportation System joint stock company.
Yet, this fact can also be interpreted as small but steady progress in establishing the consortium. For it is clear that such complex and indispensable documents as feasibility report and business plan can only be viewed in a most general outline unless the problem of estimated budget, staff-recruitment, and, alas, salaries, are solved. (Incidentally, the consortium’s business plan is to be submitted for both countries’ governmental perusal on August 30, 2003, at the latest). Another proof of this is the experience of the Odesa-Brody oil pipeline construction, when builders got down to drawing up a high-quality business plan too late, after the project had been finished.
It was not quite clear until recently about the consortium management system, either. By decision of the company’s foundation meeting on November 7, the board of founders was to be headed by Oleh Dubyna, the then First Vice-Prime Minister of Ukraine. Later in December, Prime Ministers Viktor Yanukovych of Ukraine and Mikhail Kasyanov of Russia agreed in Moscow that the two governments would be represented in the gas transit consortium by Vice-Premiers Vitaly Haiduk and Viktor Khristenko.
What further complicated the matters was the intention to form a joint Russian-Ukrainian-German task force in February in order to discuss the possibility of German companies joining the Russian- Ukrainian gas transit consortium. It was widely believed that Germany would be represented in this joint venture by Ruhrgas. No success so far. Leonid Kuchma announced recently that, for a number of reasons, the trilateral meeting of the consortium partners, slated for early February, was postponed until March, emphasizing that this did not occur on the Ukrainian side’s initiative.
It will be recalled that M. Kasyanov held talks on this matter in Germany on December 2-3. At the end of that month, a delegation of Ruhrgas and Germany’s federal ministry of the economy visited Kyiv, while a Ukrainian delegation visited Essen on January 22, 2003. Interfax-Ukraine quotes some reports that the Ruhrgas concern said in December it was ready to join the international consortium on the management and development of Ukraine’s gas transit system, adding that Kyiv has not yet decided on the likely participation of foreign companies in this consortium.
Meanwhile, well-informed sources claim that the trilateral meeting, originally scheduled to be held in Kyiv, was put off primarily because Ruhrgas just ceased to exist — unexpectedly for Kyiv — earlier this year, merging with Europe’s second largest fuel company E.ON AG which has not yet finalized its plans. Some sources also suppose that the delay in German participation in the consortium was caused by the demand of this side to be assigned 33% of the stock. In all probability, Kyiv could easily accept this if the demanded share were given at Russia’s expense. The latter, naturally, rejects this option, citing the parity clause in the relevant documents.
Still, what primarily hampers Kyiv’s progress in establishing the consortium is the domestic problem of budget fulfillment which can be greatly exacerbated if rash decisions are made. Maybe, there will be an attempt to solve this problem by leasing out the Ukrainian gas mainlines (a law has been drawn up to this effect), thus defending the interests of the budget and, hence, the Ukrainian taxpayers.
Meanwhile, Russia continues to pressure Kyiv — indirectly and gently — into making concessions in her favor. The basic method of “stimulation” are successful negotiations with our neighbors (who are our rivals on the fuel transit market). Essential progress was achieved in January about the transit of Russian gas across Poland, said our current guest V. Khristenko who had conducted talks with Polish Vice- Premier Marek Pol. Negotiations are in progress on supplying gas to Northern Europe by sea, and Russia has already begun to transport its gas to Turkey via the Black Sea. Conversely, the Ukraine-sponsored Gaztransit project (exporting gas to the Balkans) seems to finally “bitten the dust.”
COMMENT
Dietmar Stuedemann, Ambassador Extraordinary and Plenipotentiary of Germany to Ukraine, thus commented on the international gas transit consortium situation at the press conference he held on February 7 together with his French counterpart Philippe de Suremain on the occasion of the 40th anniversary of the Elysee Treaty:
“Considering the current situation with the gas transit consortium project, we must say there are two parallel sides of its development: the first is about gas companies and the second about working out the political foundations of the consortium. The project can only be implemented if the parties and business circles show political will and interest, respectively. Presidents Kuchma and Putin and Chancellor Schroeder decided in St. Petersburg to set up a trilateral gas consortium. This should be always viewed as a declared political goal. New political impulses are required today to fulfill the clear-cut decisions made in Petersburg. For instance, it was decided to form a trilateral task force consisting of high-level politicians and entrepreneurs. The first attempt to hold a meeting of this group this month failed, unfortunately, for lack of time. A new date must be fixed. I think the visit of Russian Vice-Premier Khristenko to Ukraine will help the parties agree on the date, which is not an easy thing to do because the task force includes as many as six individuals who must find time for the meeting.
“I do not think we must dramatize the situation, although it will be naturally quite difficult to bring different interests together. Yet, the overriding political objective is clear: this project should only be carried out jointly and to no detriment of any of the parties.”
