What happened last week may well have left a noticeable trace in the history of gas relations between Ukraine and Russia, although even now, as of Sept. 3, 2009, no changes have been made in the pertinent accords and contracts. On September 2 the Ukrainian and Russian prime ministers reached a gentlemen’s agreement in Sopot (Poland), whereby Ukraine will henceforth pay for the amount of Russian gas it has actually consumes, said Prime Minister Yulia Tymoshenko of Ukraine after the talks. Vladimir Putin said that now that the world is gripped by a financial crisis, such circumstances have to be taken into account in terms of mutual settlements and supplies, and added: “We have agreed that I, on my part, and my [Ukrainian] colleague on her part will instruct the business entities concerned to bear these circumstances in mind.”
Russia is aware that “the Ukrainian economy is consuming as many energy resources as it needs… We proceed from this [understanding],” Putin stated, adding that the specifics would have to be agreed upon by the business entities. Tymoshenko confirmed that the relations between Moscow and Kyiv in the sphere of gas supplies to Ukraine and transit to Europe “have been rather effective and predictable ever since the signing of the contracts.” She added that “at present we feel that all the phenomena pertaining to a crisis have left this sphere.” Fanfare would be in order at this moment, in keeping with every clause of diplomatic protocol, yet none was played to disturb Sopot’s peace and quiet — not only because this was something not envisaged by protocol, but because such ungrounded statements are not willingly accepted. After all, even legally faultless and duly ratified agreements between Ukraine and Russia are known to have been implemented partially at best. In this case it was none other than a hot-air session, nothing on official record. Will these agreements be carried out? Strange as it would seem, an analysis of the situation shows that Putin will have to keep his word. On September 2 Ukraine’s national company Naftohaz Ukrainy published its audited progress report. Among other things, the document reads that the company expects a 57-60-percent increase in the tariff on Russian natural gas supplies in 2010 from to this year’s tariff of $1.7 per 1,000 cubic meters of gas per 100 km. Starting in 2010, this tariff will be determined using a formula and the transfer to this formula will be effected as per the gas transit contract signed with Russia’s Gazprom on Jan. 19, 2009.
Naftohaz’s hopes are anything but ungrounded. In addition to the legal framework, a weighty argument for increasing the transit tariffs will be their current non-bona-fide status, as evidenced by tangible financial losses ($2.0 billion as per international financial report system) sustained by Naftohaz in 2008 and caused, among other things, by the discrepancies between the soaring gas prices and tariff stagnation.
The Russian prime minister could also have his problems to discuss and requests to make. According to some media outlets, Tymoshenko agreed to some concessions in terms of gas transit tariffs and that this agreement was reached two week earlier, during a telephone conversation. It was then the Ukrainian premier asked her Russian counterpart to stop the proceedings in the case RosUrkEnergo vs. Ukraine in Stockholm. (Gazprom has a 50-percent interest in this company, which demands $600 million from Naftohaz in penalties for a delay with payment for the gas supplies in 2008.) Ukraine, for its part, has another thing up its sleeve for Putin: construction of a nuclear fuel recycling plant, a project Russia would like to undertake, beating its formidable American rival, Westinghouse.
Agreements on all these issues may be committed to paper and officially signed during the next meeting of the Russian and Ukrainian prime ministers, likely to take place in Kharkiv this October. Most likely, however, this meeting will take place sometime in December. The Day was informed about this likelihood by the BYuT MP Oleksandr Hudyma, who said that “concessions made in conditions of financial crisis are, in effect, acts of compromise achieved between the prime ministers on the political level.”
He added that the pertinent decisions were not actually voiced because now the two teams are busy assessing the potential losses resulting from the lower transit rate and sanctions for insufficient gas import. Hudyma went on to say that under such conditions the only possibility of receiving concessions from Russia is the gas transit tariff, which can be changed starting from Jan. 1, 2010. In his opinion, Russia was not likely to pressure the signing of such contracts until December 2009, and he said that the two heads of government discussed the Odesa-Brody oil pipeline project.
Hudyma felt sure that Tymoshenko would never accept the idea of “showing Russia the door out of this oil pipeline project before completing the project to supply Caspian Sea oil to the EU.” “In Tymoshenko Ukraine will never have a person who plays such adventurous games just to do damage to Russia.” Hudyma did not deny that Russia may be interested in the nuclear fuel recycling project: “The art of holding talks is in keeping certain positive results undisclosed until a certain date… If we live to see the next year, we’ll see that Ukraine has used not 76 billion cubic meters of gas, as in 2007, but, say, 50 billion. This will mean that Ukraine’s dependence on Russia has dropped from 80 to 50 percent. This will be the breakthrough we have promised our people to accomplish.”
