Pipe Dream Project Leaves Gas Problems Unsolved
With new President Yury Boiko at the helm, the Naftohaz Ukrayiny Company is taking steps toward greater openness. This statement can be both confirmed and denied, judging by the press conference held February 28 at the Ministry of Fuel and Energy and devoted to the prospects of Ukrainian gas import diversification.
Representing Naftohaz at the conference was Deputy Chairman of the Board Mykhailo Derkach who worked at Ukrhazprom well before Mr. Bakai was in office and, therefore, is one of the true Ukrainian natural gas top veterans. It is they who once conquered the gas fields of Siberia and for this reason still sincerely believe in the reality of grandiose projects. This is why Mr. Derkach was entrusted the task of acquainting journalists with the latter.
But probably it is not so much the host’s personal assurances as the moment chosen for the event that helps the journalists understand the essence of the diversification issue. Frankly, as soon as certain misunderstandings arose in Ukrainian-Russian gas relations in the past, both sides would resort to their favorite methods. In this situation Russia would invariably raise hue and cry over the not sanctioned withdrawal of gas from the pipeline, at times going so far as accusing Ukraine of an outright theft. Ukraine would in turn choose to boast of its rather dubious capabilities to diversify its gas supplies. So we seem to be again in for difficulties. For Mr. Derkach got down to enumerating a multitude of possible gas transport routes from the Caspian region, including even Iran. Moreover, what can be considered the star attraction is sea gas transport based, according to Mykhailo Derkach, on the principles applied by the Russians when they were laying the Blue Flow gas pipeline. It will be recalled that former Prime Minister Pavlo Lazarenko also tried to set off a similar propaganda bombshell shortly before he fell ill and wound up in a US jail. Yet, he had an advantage. Had he had his way, he could have execute this daring project at his own expense, that might well not be his own.
But let us get back to the possible misfortunes that our citizens could face, judging by the renewed concentration on diversification. The answers that the Naftohaz Ukrayiny did and did not give were not overloaded with openness in this case. Asked by The Day about the transfer of Naftohaz eurobonds to Russia’s Gazprom, Mr. Derkach had to hide behind the fragile back of a press service lady who announced that this will be the subject of another press conference. He said the following about results of the Naftohaz Ukrayiny audit conducted by the Arthur Andersen firm, “The audit results are being studied and will be discussed at a company board meeting. I don’t think there is any secret there. And should there be any secrets, they will not be made public.”
In fact, the main secret about the delayed issue and transfer to Russia of the so-called surrogate Naftohaz Ukrayiny securities is that the surrogate could well turn into full-fledged Ukrainian government bonds. And the whole chain of normative and technical faults in the issue of these securities begins with the all too long process of audit. The Day’s experts believe that, while the audit continues, the company will fail to issue its own shares, let alone eurobonds. This turn of events is more than advantageous for Russia which would like to deal with the public, rather than corporate, debt of Ukraine. This is why our partners also have their own important reasons to reject the Ukrainian gas bonds: Russia has not yet decided how to license acceptance-transfer operations and levy taxes on the bonds that cross the border.
INCIDENTALLY
The Cabinet of Ministers of Ukraine has made amendments to the charter of the Naftohaz Ukrayiny National Company, authorizing it to issue bonds, Minister for Fuel and Energy Vitaly Haiduk told Interfax-Ukraine. In his words, the company’s charter was amended in compliance with a government resolution passed last Wednesday. Mr. Haiduk failed to specify what kind of bonds the company is now allowed to issue.
As has earlier been reported, the intergovernmental agreement on additional measures to ensure the transit of Russian gas across the territory of Ukraine dated October 4, 2001, authorizes Naftohaz Ukrayiny to issue eurobonds worth about $1430 million in face value as part of restructuring its natural gas debt to Russia’s Gazprom. The bonds are to be issued for a twelve years with a grace period of three years at an interest rate of Libor +1%.
Under Ukrainian law, joint-stock companies can issue bonds for an amount not exceeding 25% of their statutory capital. Meanwhile, Naftohaz Ukrayiny’s statutory capital is UAH 5564.71 million ($1046 million at the current rate of UAH 5.3215/$1).
