VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
On January 19, Russia's Gazprom and Naftogaz Ukraine signed two unrelated deals, a gas supply and a gas transit contract for 2009 through 2019. Under the supply contract, Ukrainian consumers get a 20% discount from the European gas price. However, Ukraine's transit fees remain at $1.70 per 1,000 cu m per 100 km. Russia and Ukraine will adopt market pricing in 2010.
The contract stipulates quarterly price adjustment by a formula which incorporates fluctuations in fuel oil and gasoil price indexes, and a take-or-pay requirement for 80% of the annual supply volume with penalties for failure to use the specified amount.
Given the current production slump in Ukraine along with a sufficient gas reserve in the country' underground storage tanks, Ukraine asked Gazprom to cut the volume of gas specified in the 2010 contract by 35%, from 52 bcm to 33.75 bcm, and to set the minimum annual amount at 27 bcm.
As of October 1, Ukraine had 26.5 bcm of gas in storage and planned to boost that amount to 27-28 bcm by the end of this year.
The actual amount of Gazprom's gas that crossed Ukraine to Europe in January-September was 64.9 bcm, which is less than planned under the contract (86.94 bcm). Gazprom made an advance payment of $2.15 billion for part of the transport services. Added to the 2004 and 2008 advance payment, Gazprom has already paid for gas transit in 2009 and part of 2010.
In 2010, the plan is to ship 116.069 bcm of gas to Europe across Ukraine, including 3.3 bcm to consumers in Moldova and 112.769 bcm to Western Europe. The relevant appendix to the contract has been drawn up, discussed and sent to Ukraine.
Ukraine expects to raise an EBRD loan, although the European lender is unlikely to issue more than $300 million directly for the settlement of Ukraine's gas problems; the country could also use part of the planned $3.3 billion IMF loan, while $1.9 billion of this will be used to repay Ukraine's foreign debt.
