However, both are bracing themselves for new gas wars
Russia has announced the end of the gas war with Ukraine, promising to resume gas export to Europe at 10 a.m. Moscow time today. By 16:00 on Wednesday, gas should start flowing out of Ukraine. However, the conflict is far from settled. Gazprom threatens to cut off transit if Ukraine continues to siphon off gas for technical needs. Kiev does not conceal that it would do so.
Yesterday morning, the Ukrainian Vice Premier Grigory Nemyrya and the deputy head of Naftogaz Vladimir Trikolich again signed the protocol on international monitoring of gas transit through Ukraine, without any appendices or reservations. Earlier the Ukrainian Premier Yulia Tymoshenko wrote an additional declaration's reference into the document approved by Russia, prompting Russian President Dmitry Medvedev to declare the protocol to be "null and void." As a result, the parties had to sign the document again and it was not until the evening that Gazprom head Alexei Miller promised to open the tap on Russia's Western border at 10:00 Moscow time on January 13..
"We will start trial pumping of gas through the Sudzha station (in Russia - Kommersant) in the direction of Western consumers and to the Orlovka gas metering station (in Ukraine - Kommersant) which will ensure gas supplies to the Balkans", Mr Miller explained during a meeting with Prime Minister Vladimir Putin.
Naftogaz announced that gas would reach Romania, Moldova and Poland by 16:00 Moscow time on January 14. "Our system is operating in reverse mode and it would take 36 hours to switch it to normal supply mode," the company's spokesman Valentin Zemlyansky explained to Kommersant.
However, the main contradictions between Russia and Ukraine over gas supply and transit have still not been removed. For example, the conflict around technical gas that ensures the operation of the gas transportation system has yet to be resolved. Gazprom is not supplying gas to Ukraine yet. The country's gas reservoirs are sufficient to provide gas to the domestic market, but not to the European Union. "Therefore, Ukraine will continue to siphon off 21 million cubic metres of gas in order to pump the remaining gas to the EU", Valentin Zemlyansky says. That is why Russia had suspended gas transit to Europe on January 7.
Gazprom is aware that a new conflict is all but inevitable. "Naftogaz ought to understand that in making such statements and acting as it does, the Ukrainian side is again creating a crisis with the transit of Russian gas to European consumers," says Sergei Kupriyanov of Gazprom.
The only way out for the parties is to agree on the price of gas for Ukraine and sign a contract within 36 hours. However, as of yesterday evening, there had been no narrowing of the gap between the parties. Ukrainian representatives did not quote any prices yesterday. A Kommersant source close to the country's government says it "would settle for $250 per 1000 cubic metres". This was the price offered to Ukraine by Gazprom on December 31, 2008, but Ukraine insisted on $201 per 1000 cubic metres. But the Russian position has changed since then. Deputy Chairman of Gazprom's Board, Alexander Medvedev, reaffirmed yesterday that the price for Ukraine in January would be "at least $450 per 1000 cubic metres." "If Ukraine has problems funding gas supplies it can turn to the international community," added Vice Premier Igor Sechin. We know that the IMF has promised it a $16.5 billion loan. If Russia is approached, we are prepared to give it due consideration."
In addition to the price debate, the parties will resume the discussion of two other key issues: the preservation of the existing system of gas supplies to Ukraine which involves a middleman firm, Rosukrenergo (in which Gazprom has a 50% stake) and allowing Gazprom to control the Ukrainian gas transportation system. On Sunday evening Vladimir Putin, in an interview with the German TV channel ARD, called to mind the memorandum on the creation of an international consortium of Russia, Ukraine and Germany, with the possible inclusion of Italy and France, "which would rent the Ukrainian gas transportation system." But "if the Ukrainian state wants it, we are ready to take part in its privatization," the Russian Premier said. In addition, Mr Putin made it clear that he would agree to any form of controlling gas transit through Ukrainian territory.
In early 2007 the oil and gas war between Russia and Belarus ended with Gazprom buying 50% of the Belarusian gas transportation system Beltransgaz. Earlier Russia repeatedly offered to rent the Ukrainian gas transportation system on a long-term basis while the system would still be owned by Ukraine. "It would be a win-win situation", Vladimir Putin said. However, as of yesterday no answer had been received from Kiev. Meanwhile, Igor Sechin declared that international experts would monitor gas transit through Ukraine on a permanent basis and not for "30 days," as was proposed on January 10-11.
Possible financial claims could provide Russia with an additional leverage in its relations with Ukraine. Gazprom is ready to address to Ukraine all the possible lawsuits for the suspension of gas supplies, Alexander Medvedev said. "Our lawyers are preparing remedies, the top manager said. Even if such lawsuits are presented to us, which is theoretically possible, we have someone to deflect them to. We will demand compensation for damages (assessed at $800 million by Vladimir Putin on Monday - Kommersant) from the guilty party. The other partners who were deprived of gas because of Ukrainian actions are going to do the same." Some lawsuits "have already been filed or are being prepared," Mr Medvedev said. European Commissioner for Energy Andris Piebalgs once again promised that if exports to the European Union are not resumed or suspended the EU will "name the party" that is to blame for all that is happening."
Natalya Gavrish