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Russia, Ukraine strike gas deal to resolve crisis: Gazprom
2008-03-13
Russian gas giant Gazprom said Thursday that it had reached a deal with its Ukrainian counterpart on resolving differences that came to a head last week with three days of gas cuts to Ukraine. Gazprom chief executive Alexei Miller, and his opposite number at Ukraine's Naftogaz, Oleg Dubina, "signed an agreement on the development of relations in the gas sphere" in Moscow, a statement said. Speaking during a visit to Brussels after the announcement, Ukrainian President Viktor Yushchenko welcomed the agreement with Gazprom but noted that parts of the deal still had to be "assessed and accepted." The president's press office later said Yushchenko had called for a meeting with Ukrainian Prime Minister Yulia Tymoshenko, who has been heavily involved in the gas negotiations with Russia. Under the agreement, Gazprom said Ukraine will meet a Russian demand that gas deliveries so far in 2008 will be paid for. Starting this month, Ukraine will no longer make gas payments via opaque intermediaries criticised by Ukraine's leadership, it added. In clauses that analysts said could prove more controversial for Ukraine, the deal said Gazprom will supply Ukrainian industries directly from April and hinted at price hikes for imports from 2009. "It's really difficult to expect this to be the end of the fight," said Pavel Kushnir, an oil and gas analyst at Deutsche Bank in Moscow. "I don't think all the issues have been resolved," Kushnir said. Months of bickering over gas supplies between Moscow and Kiev came to a head when Russia halved -- and then restored -- supplies to Ukraine last week, raising European concerns about the reliability of Russian supplies. A similar dispute in 2006, when Russia briefly cut off all of Ukraine's gas, caused disruption to supplies to several European Union countries. The EU relies on Russia for a quarter of its gas supplies. In Thursday's statement, Gazprom said Ukraine had agreed to pay for supplies of Russian gas in January and February through RosUkrEnergo, a controversial intermediary owned by Gazprom and two Ukrainian businessmen. The price for that gas will be 315 dollars per 1,000 cubic metres. Naftogaz explained that there would be no payment as such but that the 1.4 billion cubic metres of gas delivered by Russia in January and February would effectively be worked out through reduced supplies going forward. Gazprom said Ukraine will also pay, via RosUkrEnergo and another subsidiary, UkrGazEnergo, for deliveries of 5.2 billion cubic metres of Central Asian gas that were made in January and February. But from March until the end of 2008, the payments will be made directly by Naftogaz at a price of 179.5 dollars per 1,000 cubic metres, in line with demands made by Yushchenko ahead of the talks, the statement said. Ukraine imports most of its natural gas from ex-Soviet Central Asian republics via pipelines that cross Russian territory. But Kiev has had to import more Russian gas in recent months because of problems with the Central Asian supplies. The three main Central Asian producers, Kazakhstan, Turkmenistan and Uzbekistan, said earlier this week that they would charge "European" prices -- almost double current levels -- starting from 2009. "Negotiations on supplies to Ukraine in 2009 and coming years will be carried out taking into account the purchase prices of Central Asian gas," the Gazprom statement continued, pointing to possible price hikes. Analysts said price hike would have a serious impact on Ukraine. "We don't think the potential increase in Central Asian gas would have any effect on Gazprom but it would have a very significant, almost devastating, effect on Ukraine if it happens," said Kushnir from Deutsche Bank.
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