Gazeta: “Vladimir Putin concedes on gas agreements with Ukraine”
Ukraine has managed to alter the gas contract with Russia in its favor.
Russia eventually gave financial support to Ukraine. Discussions of the gas issue in Yalta revealed that Gazprom will not fine Ukraine for falling short on buying the required amount of gas. Russia is actually granting a loan to its neighbour despite Prime Minister Vladimir Putin's previous statements that it would not support Ukraine unless Europe helped, too. However, Putin has now changed his mind.
"Considering Russia and Ukraine's special relationship, in particular between Gazprom and NAK (Naftogaz of Ukraine), we have decided not to impose sanctions. I would like to confirm this once again on the record: sanctions will not be imposed," Putin said after the talks.
The contracted amount of gas for 2010 will be revised at Ukraine's request, but the decision to increase the cost of gas transit through Ukrainian territory by 60% will not be revised.
This support is significant. The contract signed by Gazprom and NAK early this year is based on a "take or pay" principle, meaning that the consumer has to pay for its failure to take the contracted amount of gas. In 2009, Ukraine will not take about 14 billion cubic meters of gas out of the contracted 42 billion cubic meters. This amounts to a $7 billion fine, a massive amount for Ukraine.
No mention of Ukraine's inability to pay for gas in the next few months was made at this meeting. During the October-November meetings with European partners, Putin invariably warned that Ukraine might not have enough money to pay for the gas, in which case Russia would halt Ukraine's domestic fuel supplies. This issue was not even raised in Yalta.
"The meeting was surprisingly constructive. Tymoshenko said that the end of this year and the beginning of the new one would pass without any upheavals," a Russian participant of the restricted meetings told Gazeta. He said that Ukraine had always found money to pay for the gas and that it would find it now; he added that the atmosphere became tense because of political antagonism. He also considered that the Yalta agreements would be an asset to Tymoshenko in her election campaign.
Russia made another concession by altering the terms of the gas contract for 2010. "We have decided that Gazprom and NAK should agree on new amounts of gas and coordinate gas supplies despite the previous agreements made on the purchase of gas by Ukraine. If Ukraine does not take excessive amount of gas, it will not be subjected to sanctions," Putin said.
Deputy Prime Minister Igor Sechin explained that Ukraine would take less gas in 2010 than it had planned before but more than it consumed in 2009. Sechin said that the contract would meet Ukraine's requirements.
Earlier, Ukraine requested that Gazprom reduce the contracted amount of gas by 35% in 2010 - from 52 billion to 33.75 billion cubic meters. The minimum amount should be 27 billion cubic meters of gas.
Additionally, beginning in 2010 Russia will have to pay much more for the transit of its gas through Ukrainian territory - $2.7 for a thousand cubic meters every 100 km as compared to $1.7 before. The price of gas for Ukraine will remain strictly at the European rate. Ukraine currently buys Russian gas at a 20% discount of the European price. "Next year there will be no discount and no transit preferences," Putin said.
Andrei Biruykov
