In his open letter to President Medvedev, Viktor Yushchenko could not remain silent. While his main election rival Yulia Tymoshenko set off to Yalta for gas talks with Prime Minister Putin, he found a way to draw attention to himself. On the night from Wednesday to Thursday a wordy letter to Dmitry Medvedev was posted on the Ukrainian president's website. Viktor Yushchenko suggested that the Russian president changes the gas contracts.
"If the contracts remain as they are, next winter Ukrainian state company (Naftogaz) will not have resources to prepare for the next heating season, which poses a potential threat to reliability of gas supplies to Ukraine and its transit to other European countries," the letter reads.
Yushchenko suggests reviewing three points, specifically the gas price for Ukraine, supply volumes and transit volumes. Currently all these points are governed by the January agreement, with the gas price calculated using the market formula. This year Ukraine, however, received a 20% discount. From January 2010 that will not be valid any more. As Izvestia analysts predicted, Ukraine will try to keep this discount or, as the letter says, "establish an economically grounded price".
Ukraine must purchase around 50bn cubic metres of Russian gas this and next year. But in 2009 Ukraine will actually buy only half as much. According to Viktor Yushchenko, penalties for the failure to use contracted volumes are $7.2-7.5bn to date and may reach $8.5bn by the end of the year. These debts, the Ukrainian president believes, will hit hard at the country's ability to pay. All of Gazprom's long-term agreements are now "take-or-pay," with minimum supply volumes (40bn cubic metres in 2009). If the actual purchase volume is lower, the buyer shall pay a fine. But Russia has already waived the fine! Putin effectively took the issue off the table in his September meeting with Tymoshenko. And now Yushchenko requests cancellation of the payments already waived and set supply volumes of 30bn cubic metres for next year.
Russia's fine waiving turned out to be not enough. Ukraine did not receive $2-3bn for Russian gas transit to Europe, Yushchenko claims. Lower profits are the result of lower purchase amounts. And now Ukraine wants to incorporate a "take-or-pay" principle in a transit contract and set out minimum transit volumes and "symmetrical" fines for Gazprom. Read: do not penalise Kiev, but do penalise Moscow.
"I have never heard this principle applied to transit contracts in global practice," the Veles Capital Investment Company's analyst Dmitry Lyutyagin says. The problem is it is not clear to whom this principle should be applied, because gas is purchased by end consumers, and those are the European partners. The total pumped amount depends on them. This means Ukraine should make claims against Europe.
"We will take into account all the suggestions of the second party but we do not think any amendments to current contracts are necessary," Gazprom official spokesperson Sergei Kupriyanov told Izvestia.
Presidential aide Sergei Prikhodko has already stated Yushchenko's letter is definitely intended for domestic politics and Russia has no intention of taking part in these "intra-Ukrainian fights".
Varvara Aglamishyan