[Ohio UZO News] Ukraine: Note: NYT; WSJ; FT

[Deychak, Orest]

There will be no mailings until the week of January 12. 

 

For myself, Orysia, Natalie and Olesyk, best wishes for a Joyous, Peaceful and Fruitful New Year, and, for those celebrating on January 7th, a Blessed Christmas.

 

Orest Deychakiwsky

 

 

The New York Times

Gazprom Refuses to Back Off Threat to Cut Gas Supplies 

By ANDREW E. KRAMER 

31 December 2008

Late Edition - Final

2

MOSCOW -- The Russian natural gas monopoly, Gazprom <javascript:void(0);> , refused on Tuesday to lift the threat of cutting off fuel supplies to Ukraine, despite the Ukrainian government's offer to pay at least part of the money it owes.

As it has in the past, the disagreement between Gazprom <javascript:void(0);>  and Ukraine has made other European countries uneasy; about 80 percent of Russia's gas exports to Europe pass through Ukraine and have been disrupted several times by the turmoil of post-Soviet politics and economics.

Gazprom <javascript:void(0);>  briefly followed through on such a threat in 2006. Then, the loss of pressure in the Continent-wide natural gas pipeline cascaded westward into Europe, resulting in shutoffs not only in Ukraine but also as far away as Italy, and embarrassing the Kremlin.

This time around, Gazprom <javascript:void(0);>  maintains Ukraine owes $2.1 billion for natural gas shipped in November and December, and for late fees. The company has threatened to cut off supply on Thursday if payment is not adequate.

Naftogaz, Ukraine's national energy company, said on Tuesday that it had paid $1.5 billion to RusUkrEnergo, the Switzerland-based gas trading company that Gazprom <javascript:void(0);>  uses to supply Ukraine, settling the debt but not the fines.

A spokesman for Gazprom <javascript:void(0);> , Sergei V. Kupriyanov, said that the money had not been received yet and that it was unclear whether this payment would be enough. The two sides have also not agreed on a price for supplies in 2009.

''Let's first see the payment, then we can talk about what will happen next,'' Mr. Kupriyanov said.

Gazprom <javascript:void(0);> , hard hit by declining energy prices, is trying to squeeze more money from former Soviet customers. The dispute is also politically tinged.

Inside Ukraine, a strategically important country of 46 million people between European Union countries and Russia, the gas pricing negotiations are a divisive issue for an already factious government.

Ukrainian politicians say Russia, which has openly claimed a role for itself politically in the former Soviet space, has seized on Ukraine's economic troubles to sow greater discord among the ruling parties by confronting them with a difficult negotiation over fuel prices.

The negotiations have coincided with a widening breach between the two most prominent leaders of the 2004 street protests known as the Orange Revolution, the prime minister, Yulia V. Tymoshenko, and the president, Viktor A. Yushchenko.

Once allies, the two are likely to square off in presidential elections next year or in 2010.

Ms. Tymoshenko has sought to broker a solution to the gas price dispute and position herself as the candidate better able to negotiate with Russia. By taking a hard line in talks with the administration of Mr. Yushchenko, who leans closer to the West, Gazprom <javascript:void(0);>  may undermine his already waning chances of success in future elections.

''They are playing on our internal disputes,'' Volodymyr I. Polokhalo, a member of Parliament in the party of Ms. Tymoshenko, said in a telephone interview.

''Gazprom <javascript:void(0);>  is taking into account the situation in Ukraine, and of course, that weakens the government position,'' he said.

Ukrainian authorities, meanwhile, say they are better prepared for a possible shutoff this year than in 2006 because Naftogaz has stockpiled a reserve of 17 billion cubic meters of natural gas, enough to meet the country's needs until the end of the heating season in April.

The Wall Street Journal

World News: Ukraine, Russia Progress In Resolving Gas Dispute 

By Guy Chazan 

31 December 2008

A5

Ukraine and Russia inched closer to resolving the gas dispute that has put Russian gas supplies to Europe in jeopardy, though Moscow said negotiations were still continuing and played down talk of a breakthrough.

The talks are being watched closely in European capitals, after OAO Gazprom <javascript:void(0);> , the state-controlled Russian energy giant, in December threatened to cut off supplies to Ukraine on Jan. 1 unless Kiev paid off $2 billion in arrears and clinched a new supply deal for 2009.

On Tuesday, the Ukrainian government issued a decree saying two state banks would lend state energy company Naftogaz Ukrainy <javascript:void(0);>  up to $2 billion to pay off its arrears. Later, Ukrainian President Viktor Yushchenko said in a statement that Ukraine had paid Gazprom <javascript:void(0);>  what it owed for November and December. Those payments would, he said, pave the way for a new supply deal.

But a spokesman for Gazprom <javascript:void(0);> , Sergei Kupriyanov, said it was "too early to talk about debt repayment."

"We don't see the money yet," he added, and said talks were continuing.

Even if Naftogaz pays off its debts, there remains disagreement over how much Ukraine should pay for the gas it imports from Russia next year. Naftogaz has offered to buy gas at about $200 per 1,000 cubic meters, according to a person familiar with the talks: Gazprom <javascript:void(0);>  wants twice that amount. Ukraine now pays $179.50 per 1,000 cubic meters. The average European price Gazprom <javascript:void(0);>  charges is about $500, reflecting in part the longer distance the gas must travel.

Most of the gas Europe receives from Russia flows in pipelines across Ukraine, and Gazprom <javascript:void(0);>  warned its European customers this month that those deliveries could be disrupted unless the dispute is resolved. Europe has called on both sides to seek a compromise.

The spat has raised uncomfortable memories of January 2006, when Gazprom <javascript:void(0);>  turned off the tap to Ukraine in a pricing dispute, leading to supply disruptions in Western Europe. That raised fears an emboldened Russia was using its energy wealth to intimidate its neighbors.

Analysts say there is little likelihood of a repeat of 2006. Then, Russia accused Ukraine of siphoning off gas from the pipelines running across its territory that was intended for Gazprom <javascript:void(0);> 's European customers. This time, Ukraine has said it will guarantee all supplies to Europe. Kiev has been storing gas, and will have enough even if Russia turns off the switch.

Separately Tuesday, Gazprom <javascript:void(0);>  said second-quarter net profit nearly tripled, thanks to higher gas prices and increases in European sales volumes. Gazprom <javascript:void(0);> 's shares plunged in recent months amid the global financial crisis. Gazprom <javascript:void(0);>  has turned to the Russian government for assistance to refinance foreign debt and to fund record investments next year.

---

The Financial Times

Ukraine nears Russian gas deal

By Roman Olearchyk in Kiev and Isabel Gorst in Moscow 

Published: December 31 2008 02:00 

Ukraine and Russia appeared to be edging towards an eleventh-hour resolution of their dispute over gas debt yesterday after Ukraine said it had settled its obligations to avoid a cut-off in supplies tomorrow that could disrupt deliveries to Europe.

Viktor Yushchenko, the Ukrainian president, said the country had paid Gazprom for gas supplied in November and made an advance payment for December. He said negotiations over a new gas supply contract for next year were continuing.

Naftogaz, Ukraine's state gas company, said it was able to pay its debt to Gaz-prom as two state banks had granted it $2bn (€1.4bn, £1.4bn) in loans. But Sergei Kuprianov, a Gazprom spokesman, said: "We have not yet received the money, so it is early to talk about closing the account."

Earlier, Mr Kuprianov said Gazprom would be under no obligation to continue supplying gas to Ukraine after tomorrow if the debt was not settled in full.

Gazprom claims Ukraine owes $2bn for past gas supplies, including about $450m in fines for late payments. It is unclear whether Ukraine has agreed to pay the fines.

Europe, which receives a quarter of its supplies from Russia, the bulk of it via Ukraine's vast pipeline system, has closely watched this, the fourth gas spat between Kiev and Moscow in as many years.

Mr Kuprianov said Gazprom "would do everything in its power to ensure" that Russian gas deliveries to Europe were not disrupted if Ukraine were cut off. "The Ukrainian side has declared its readiness to fulfil its transit obligations, however events unfold. That cannot but make us happy."

Mr Yushchenko said Ukraine was and would remain a reliable transit route for Russian gas to Europe. Hryhoriy Nemyria, Kiev's deputy prime minister, told the Financial Times that Ukraine "will make every effort to reach an agreement and to ensure stable supplies to Europe".

 

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