Ukrainian President opposes gas confrontation with Russia

President Kuchma accused the Cabinet on October 19 of failing to take proper steps to help implement Ukraine’s gas delivery accords with Turkmenistan and Russia. He went on to remind his listeners that the said accords had been achieved at the highest political level, meaning close constructive and mutually advantageous cooperation, adding that the government now had to take the next steps. The Ukrainian President pointed out that “Turkmenistan will never make any gas deliveries to Ukraine unless Ukraine can make timely payments.”

Indeed, two weeks after the Ukrainian-Turkmenistan summit (positively assessed in both countries), the Ukrainian Cabinet seems not to have taken any specific measures to implement any of the decisions made or remove any of the existing problems. Mr. Kuchma believes Naftohaz Ukrayiny is “unable to pay” for such natural gas deliveries. Nor are there any other business entities in Ukraine capable of shouldering the responsibility for such payments for gas supplied by Turkmenistan and Russia. The president went on to say that all the money collected on all of Ukraine’s energy markets do not suffice to repay the liabilities to Itera (Ukraine owes this company UAH 320 million and Gazprom $700 million).

Under the circumstances, the Cabinet’s energy people, rather than attempt to normalize relationships with actual partners, are attempting to tell us stories about the energy sector being all thumbs up or give us white elephant projects like an oil pipeline laid out across the bottom of the Black Sea.

Other speculations include media references to Ukraine and Poland allegedly negotiating a gas pipeline together with Norway.

The Ukrainian President regards this Norwegian project as “totally inadvisable.” As he put it, “Ukraine has begun no such gas supply talks with Norway” and that “this road will lead nowhere.” Mr. Kuchma noted that Ukraine has gas sources and at a less expensive price; Norwegian gas price is far more expensive than what we get from Russia or Turkmenistan.

Myroslav Yakymiv, deputy head of Ukrhazproekt (Ukraine’s leading public joint stock company specializing in natural gas pipeline design) told The Day he had never dealt with the subject. Experts believe that Norway has more gas deposits than Ukraine, but that it is no match for Russia, Turkmenistan, or Iraq. Meaning that an arterial gas pipeline would be feasible only if Norway had gas deposits by far exceeding its current proven reserves.