Thursday, January 15, 2009

gazprom recap and subtext...,

Eurasia Daily Monitor | Russia was supposed to resume pumping gas to the EU through Ukraine on January 13 following trilateral Moscow-Kyiv-Brussels talks, but the Russia-Ukraine gas row is far from over. Neither the issue of Kyiv’s debts, the very existence of which Ukraine denies, nor the conditions of gas supply to Ukraine in 2009 have been clarified. There are fears in Kyiv that Moscow wants to take control of Ukraine’s gas transport network. Meanwhile, Ukrainian industry, heavily reliant on gas, is grinding to a halt; and people are freezing in their homes in subzero temperatures.

Russia stopped delivering gas to Ukraine on January 1 in the absence of contracts for 2009; and it stopped gas transit through Ukraine on January 7, accusing Ukraine of siphoning off gas bound for Europe. Ukraine’s gas monopoly Naftohaz Ukrainy admitted that it had been withdrawing 20 to 25 million square meters of gas from the pipelines a day in order to keep up pressure in the pipe needed to pump gas to the EU. Gazprom agreed to resume gas transit only if inspectors representing the European Union, Russia, and Ukraine could verify that no gas was being siphoned off (Kommersant Ukraine, January 12).

A protocol stipulating the conditions of checking the pipelines in Ukraine was signed by the three parties from January 10 to 12 with the mediation of Czech Prime Minister Mirek Topolanek, who traveled between Moscow, Kyiv, and Brussels (Interfax, January 10-12). Ukrainian Prime Minister Yulia Tymoshenko tried to attach to the protocol a declaration that essentially shifted all the blame for gas transit disruptions on Russia saying that Ukraine did not steal Russian gas and that it had been a reliable partner in gas trade. This angered Moscow. It accepted the protocol only when Tymoshenko backtracked, saying that the declaration was unrelated to the protocol (UNIAN, January 12).

Although gas deliveries to the EU are about to resume, it is too early for the EU consumers of Russian gas to sigh with relief. Russian President Dmitry Medvedev warned that transit through Ukraine might be halted again if Ukraine resumed “stealing” gas (Interfax, January 11). Ukraine has never admitted to “stealing,” and it is still not clear which side will pay for the “technological” gas that Ukraine uses to maintain pressure in the pipelines. In the absence of contracts between Ukraine and Russia, new disruptions to the gas transit cannot be ruled out.

Russia insists that Ukraine owes $600 million for gas delivered in 2008, and Gazprom wants Ukraine to reimburse $800 million that it lost because of the transit halt (Ekho Moskvy, January 12). But the issue of the gas price for 2009 remains the thorniest. According to Kommersant, Ukraine has agreed to pay $250 per 1,000 square meters of gas, a price Gazprom offered at the end of December and Naftohaz rejected; but Moscow now wants “the market price” of $450, something that Kyiv simply cannot afford (Kommersant Ukraine, January 13).

It is feared in the Yushchenko administration that the gas row may result in Ukraine losing the gas transit network, which is probably the country’s most lucrative asset. Putin said in a recent interview that Russia was not against taking part in the network’s privatization (Interfax, January 11). The head of Yushchenko’s office, Viktor Baloha, accused Russia of “blackmailing” Ukraine in order to grab the network. According to Baloha, if Kyiv did not agree to Moscow’s conditions, Moscow expected an uprising against Yushchenko in the industrial east prompted by a stoppage of the local industry and freezing cold in homes as a result of the absence of gas (Ukrainska Pravda, January 10). Ukrainian laws forbid the network’s privatization.

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