Russia Steps On the Gas
On July 1, just before starting a new round of gas talks, Prime Minister Anatoly Kinakh of Ukraine and Vice-Premier Viktor Khristenko of Russia were beaming with optimism. They said they were certain that Ukraine and Russia would manage to solve all the problems to be discussed during the bilateral talks.
However, this forecast came true only to an extent. The two sides signed an international protocol specifying the amount of Russian natural gas to be transported via Ukraine’s gas transit system next year. Taking into account gas supplies to Russia and Moldova, this amount will reach 128.7 billion cubic meters (earlier a contract was signed between the Naftohaz Ukrayiny and Gazprom companies on the transit of at least 110 billion cu. m. across the Ukrainian territory until the year 2013). The transit rate remains at the current level of $1.09 per 1000 cu. m., as does the accounting price, $50 per 1000 cu. m., of the gas to be used as payment for transit. In the future, transit rates will be established annually by special documents.
The two sides were also expected to sign a contract on the utilization of Ukrainian underground gas reservoirs by Russia’s Gazprom until 2013. It was planned that Ukraine would allow Russia to use a third of its gas reservoirs, the largest in Europe (10 out of 30 billion cu. m.). However, the second document signed, a long-term contract on the storage of Russian gas, sets out that only 5 billion cu. m. will be pumped into the underground tanks this year, with this amount rise later. Naftohaz Ukrayiny considers the talks successful and notes that Ukraine and Russia have never signed such gas contracts before.
Meanwhile, the rosy tip of the Ukrainian-Russian gas iceberg in no way solves all the existing problems. The Kharkiv talks spotlighted certain difficulties in the establishment of an international consortium to run the Ukrainian gas transport system. As it turned out, Ukraine assigns its own Naftohaz, Russian Gazprom, and potential participants from the far abroad (Ruhrgas, Gas de France, etc.) only the role of gas pipeline operators, while the Russian government believes the two countries’ presidents had earlier agreed to denationalize the pipeline. Explaining his attitude, Mr. Kinakh said that Ukrainian law so far prohibits the system’s privatization. He had repeatedly said before that changing the pipeline’s status would not be on the agenda in the immediate future. It appears that the Ukrainian premier finds it untimely to debate this matter in parliament, the more so that the problem of clearing the debts Naftohaz Ukrayiny owes Gazprom still remains unsolved. As is known, Russia has refused to accept Ukrainian bonds to save Gazprom from incurring tremendous liabilities to the budget. Nevertheless, this dispute has left Ukraine holding the bag. As Naftohaz Ukrayiny is not an A-rated international company, it is obliged to meet certain standards that these securities have. In other words, the Ukrainian bonds are still of little value and hence the Ukrainian debt problem, although settled by international agreements, still remains on the agenda.
