Vedomosti: “Russia, Ukraine agree on gas price of $360”
By Yelena Reznik
The Prime Ministers of Russia and Ukraine have announced that the gas conflict has been settled. Kiev has agreed to buy Russian natural gas at $360 per 1,000 cubic metres, the newspaper's sources say. Has Ukraine decided to try to live without Russian gas?
Announcements
Two days of top-level meetings in Moscow and Kiev (see page A2) and five-hour talks between Russian Prime Minister Vladimir Putin and his Ukrainian counterpart, Yulia Tymoshenko, late at night on Saturday have produced the expected result.
"We have reached an agreement," Tymoshenko said. Putin added, "We have agreed that Ukraine will pay for gas with a 20% discount in 2009 in return for keeping transit fees at the 2008 level."
Gas supply and transit prices will be calculated according to the European formula, without any discounts, in 2010, the two ministers said.
In addition, Gazprom and Naftogaz will interact directly, not through the current intermediary, Swiss trader Rosukrenergo (RUE, parity owned by Gazprom and businessmen Dmitry Firtash and Ivan Fursin), officials on the teams of Putin and Tymoshenko said.
Tymoshenko earlier said they would pursue only one policy - the government (meaning not presidential) policy - at the talks with Russia.
Everything will become clear today, when the prices are put on paper, Bohdan Sokolovsky, an adviser to the Ukrainian President, said. He said the President's stance had not changed; he continues to advocates for direct contracts between Naftogaz and Gazprom and "transparent and mutually beneficial" prices and rates.
Europe waiting
The transit of Russian natural gas to Europe, which was suspended on January 7, will resume "within days", as soon as Naftogaz and Gazprom sign new gas transit and supply contracts, the two Prime Ministers said. These companies have promised to prepare the necessary documents for today; the talks lasted until very late at night.
But the European Union is not happy. "We have waited for gas for two weeks; we have heard many statements, but we have not received any gas," Ferran Tarradellas Espuny, the EU Spokesman for Energy, said. He said the two-week disruption of the gas flow caused severe economic damage in Europe.
However, a Russian government official said Europe would still have to wait, since it would take 75-100 hours for gas to reach it.
Like in Germany
Before the meeting, the Ukrainian President's Secretariat said Ukraine was prepared to pay $200 per 1,000 cubic metres of Russian natural gas (it paid $179.5 in 2008) and would charge $2 for transit ($1.7 in 2008).
The two Prime Ministers have agreed that Ukraine will pay $360 in the first quarter and keep the 2008 transit fee, $1.7, according to information provided by a Russian government official, a source with close ties in Gazprom, and a source on Tymoshenko's team.
This is the average European price with a 20% discount, they say.
On the whole, natural gas may cost Ukraine $270-$300 this year, given the quarterly cuts in gas prices following the fall of oil prices, two sources said. Gazprom's budget for 2009 is based on an average European price of $280.
"The price is too high; I can't understand why Ukraine has agreed to pay it," Mikhail Korchemkin, director of East European Gas Analysis, said.
Without the discount, Ukraine would have had to pay as much as Slovakia does, $450, even disregarding the difference in transportation costs. Germany is now paying $360 for Russian gas, according to Heren Energy (now ICIS Heren), which puts the overall annual price at $240, Korchemkin said.
The analyst explained that a large client is always offered a discount, and Ukraine is the largest gas market for Gazprom, 40% larger than Germany.
Sokolovsky and the spokespeople for Putin, Tymoshenko, Gazprom, and Naftogaz refused to comment on the price.
Zero variant
The essence of the Putin-Tymoshenko agreements is "to not humiliate Russia or offend Ukraine," Tymoshenko's energy adviser Alexander Gudyma said. This is why the agreed gas price is higher than Ukraine expected and the transit fee has not been raised. The main achievement is that the intermediary has been removed from the supply scheme, he said.
Korchemkin believes that Ukraine has signed the agreement because it does not plan to buy gas in the first quarter of the year, as it has some 17 billion cubic metres of gas stored in the Naftogaz depots by the end of 2008. Naftogaz and Gazprom will negotiate a long-term contract and a new basic price in March, when gas prices fall (see page B2).
Furthermore, Ukraine's positions will be stronger in spring, because the volume of gas transit to Europe will decrease and for Ukraine it will be the time to store gas in its underground depots.
Korchemkin jokes that Ukraine is a unique client whose gas consumption is higher in spring and summer than in winter.
Rosukrenergo was the exclusive supplier of imported gas to Ukraine in 2006-2008, buying some 60 billion cubic metres of Central Asian gas from Gazprom, selling 55 billion cubic metres to Ukraine on the border and shipping the rest to Europe across Ukraine.
RUE has a contract with Gazprom until 2018 and with Emfesz, Hungary's natural gas and energy trader and services provider (under D.Firtash's control), until 2015. Rosukrenergo can be excluded from the scheme of supplies to Ukraine, but not from export supply schemes, because RUE and Emfesz will demand compensation in that case, Korchemkin said.
RUE refused to comment on this situation.
Prepared with the help of Nadezhda Ivanitskaya and Mikhail Overchenko.
