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Archive for January 12th, 2009

EC signed gas protocol

Posted by the Editor on January 12, 2009

News / 12 January 2009 | 17:15

EC signed gas protocol

EC signed gas protocol

The European Commission has signed the protocol on monitoring of gas transit via Ukraine, Russian official in the EU Vladimir Chizhov informed.

“The document is signed,” he said.

The protocol has been signed by Andris Piebalgs, EU commissioner on energy. Gazprom head Alexey Miller and RF vice premier Igor Sechin also took part in the ceremony of signing.



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Russia to resume gas transit once all monitors in place

Posted by the Editor on January 12, 2009

News / 12 January 2009 | 16:30

Russia to resume gas transit once all monitors in place

Russian energy giant Gazprom will resume natural gas transit to Europe via Ukraine once it is sure that international monitors can fully supervise the process, Prime Minister Vladimir Putin said on Monday.

Russia, the EU and Ukraine have signed a protocol to establish an independent commission to monitor the transit of Russian gas via Ukraine to Europe as a way out of the crisis that erupted last week when Russia halted deliveries to Europe, accusing Ukraine of tapping Europe-bound gas en route through the transit country.

“After independent monitors arrive at the sites listed in the document and we make sure they are capable of overseeing the transit of our natural gas, Gazprom will start pumping gas into Ukraine’s gas transportation system for transit to European consumers,” Putin said during a Cabinet meeting.

International monitors began arriving at gas transit points in both Ukraine and Russia on Sunday.

Russia and the EU signed the monitoring deal on Saturday, joined by Ukraine the following day. Russia objected, however, to Ukraine adding a declaration to the document and declared the agreement invalid as signed.

The European Commission said the addition, in which Ukraine declared that it had paid its debt to Russia and had not stolen Russian gas destined for Europe, did not affect the agreement as signed, but Putin said on Sunday that any additions were unacceptable and Kiev’s changes dealt with commercial disputes between Russia and Ukraine rather than the transit of gas to Europe.

On Monday, Ukraine removed its earlier conditions and signed a fresh version of the document, which was signed by the European Commission in Brussels later in the day.

Speaking by telephone to European Commission President Jose Manuel Barroso earlier on Monday, Putin said the resumption of natural gas transit via Ukraine should be complete and unconditional.

“After the monitoring regime is launched, Gazprom will start pumping gas into Ukraine’s gas transportation system for complete and unconditional transit to European consumers,” he said.

The European Commission said earlier some 20 countries had been affected by the Russia-Ukraine gas row, especially in the Balkan region, “where the crisis has left tens of thousands of households in the cold and forced schools, hospitals and factories to close.”

The gas conflict escalated early this month, when Russia ended shipments to Ukraine after talks on debt and a gas price for 2009 broke down, leading to a complete break in Russian gas supplies to Europe via Ukraine. The country transits around 80% of Russia’s Europe-bound gas.

A gas pricing row between the former Soviet neighbors in 2006 also led to disruptions in shipments to some European consumers, and the latest spat has reawakened concerns about the reliability of Russia as a supplier.

RIA Novosti


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Tymoshenko spoke with President of the European Commission Jose Manuel Barroso on the phone

Posted by the Editor on January 12, 2009

News / 12 January 2009 | 15:40

Tymoshenko spoke with President of the European Commission Jose Manuel Barroso on the phone

On Sunday at 21:45 Prime Minister of Ukraine Yulia Tymoshenko spoke with President of the European Commission Jose Manuel Barroso on the phone, government portal informs.

During the telephone conversation the Prime Minister of Ukraine explained the President of the European Commission that the Declaration of Ukraine’s position and the three-sided Protocol on international monitoring for the Russian gas transit through Ukraine – are two legally unbound documents.

Yulia Tymoshenko explained that the Declaration sets out Ukraine’s position on the gas crisis.

Note: The European Commission considers that the Ukrainian Declaration does not influence the protocol’s force signed by Ukraine, Russia and the European Union.


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MPs call Yushchenko and Tymoshenko to the parliament

Posted by the Editor on January 12, 2009

News / 12 January 2009 | 14:55

MPs call Yushchenko and Tymoshenko to the parliament

The Verkhovna Rada of Ukraine will send an invitation to the resident and premier to come to s special session of the parliament scheduled for tomorrow. Speaker Volodymyr Lytvyn told a briefing, ForUm’s correspondent reported.

The high officials are invited to discuss the gas issue. According to Lytvyn, the discussion of the gas question must hold “with a correspondent emotional loaf, but without hysteria.”

The speaker also pointed out that Tymoshenko’s dismissal is impossible for the moment, though he believes that “political


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The inevitability of the gas crisis

Posted by the Editor on January 12, 2009

Analytics / 12 January 2009 | 14:18

The inevitability of the gas crisis

The inevitability of the gas crisis

A dispute over Russian gas supplies happens like clockwork this time of year, and the causes remain the same. But this year’s drama was bigger

January, the season of long nights, cold days-and the suspension of Russian gas deliveries. In a moment of high drama, Russian television on 5 January showed Prime Minister Vladimir Putin telling Gazprom CEO Aleksei Miller, “Yes, cut it today,” when Miller reported that Ukraine was siphoning off gas meant for Europe.

Journalists covering the story like to put it into historical context-which usually means going back to the three-day shutdown that occurred in January 2006. But it’s worth remembering that the problem is much older that that. The temporary shutoffs of Russian gas to Ukraine and Belarus go back at least to January 1996, when Boris Yeltsin was still the West’s best hope, and long before the macho Vladimir Putin took the helm.

What is different about this event from the one in 2006-or 1996? And what has stayed the same?

One difference is that this is the first time that there has been a serious interruption of supplies forcing radical cutbacks in consumption. Bulgaria, Croatia, and Serbia have been especially hard hit. Previous interruptions were nominal, lasting no more than a couple of days, and did not cause actual stoppages.

A second difference is the desperate economic situation. Moscow is coming off a 10-year growth spurt, and the Kremlin is very worried about the impact of the global crisis on government revenues and ordinary living standards. One might think this would make Moscow less willing to risk a disruption of gas exports. On the contrary, it seems to have made Russian officials ready to double down for a full confrontation. As for Ukraine, the country ran a $12 billion trade deficit in 2008. A $16.5 billion IMF loan will see it through the winter, but an estimated $41 billion in debts will come due next year.

Third, this time around Moscow is trying a little bit harder to win the propaganda war. Gazprom’s top executives, Alexei Miller and Alexander Medvedev, have been dispatched to European capitals. And they have hired the public relations firm Omnicom and its Brussels subsidiary GPlus to get out the message. Gazprom even created a website to explain their position.

Another possible difference from previous years may be the willingness of both sides to internationalize the dispute. Today, an EU-brokered deal on sending monitors to check the flow of gas through the pipeline was close to being agreed. That could at least clear up whether Gazprom or Ukraine is responsible for interrupting the European supplies.

Otherwise, just about all the elements of the annual Russo-Ukrainian gas drama are in place. By now, all the actors in this Kabuki-style performance know their lines, and the correct postures to strike.

The first unchanging factor is the basic geo-economic reality. Four gas export pipelines cross Ukraine carrying 300 million cubic meters of Russian and Turkmen gas a day, of which around 65 million is tapped for Ukraine’s domestic needs. If Ukraine takes out gas in the absence of a contract, there is nothing Russia can do short of shutting down the flow entirely (which is what they did on 5 January). That step obviously harms Gazprom just as much as it hurts Ukraine. In fact it hurts Gazprom more. Ukraine can afford to play hardball because its vast storage capacity (inherited from the Soviet times) is sufficient to cover two to three months of domestic supply-unlike hapless Bulgaria.

The second constant is the character of the two protagonists. On one side we have the Kremlin, eager to flex its geopolitical muscles behind a façade of reasonableness. And in Kyiv we have the usual political stalemate, bitter personal rivalries, polarized political parties, and a constitutional deadlock between president and parliament.

Moscow argues that the whole crisis has been artificially created by Ukrainian politicians, keen to shake more aid money from the West and to embarrass each other in the run-up to the next presidential elections. The Kremlin’s critics suggest that Russia is more interested in payback for Ukraine’s support of Georgia in the August war.

Or perhaps Moscow wants to crank up the pressure to clear away the objections to the construction of the North Stream Baltic Sea pipeline that will reduce dependency on the Ukrainian route.

A third recurrent factor is the murkiness of the whole situation. Details about prices offered and actually paid are shrouded in mystery. Both sides seem to prefer it that way, funneling the transactions through shadowy third parties, notably the joint venture RosUkrEnergo. Most analysts see RosUkrEnergo as a vehicle through which Russia can channel some of the profits from the gas trade to select oligarchs inside Ukraine-who will presumably return the favor in some manner. Ukrainian politicians go along with this because they or their associates are being cut in on the deal.

The long-term solution is clear enough-multi-year contracts with the gas price tied to the global oil price. The Yamal pipeline across Belarus and Poland could be a model. Although there was a serious disagreement with Belarus in 2006, the Polish section of the pipeline has operated without interruption since it was built in 1994. A 2006 dispute over a proposed increase in transit fees was taken to the International Commercial Arbitration Court, which awarded the Polish partner $20 million.

One difference, however, is that in the Polish case the pipeline is owned by a joint venture between Gazprom and Poland’s PGNiG, who before the pipeline was built agreed to run it on a cost-plus basis, providing the transit operator a small fixed return on capital invested. But Ukraine has consistently refused to give up ownership in the pipeline network on its territory, even when Gazprom suggested a joint venture with a German partner. Joint ventures of two or three governments are perhaps more likely to minimize abuse.

The whole situation is reminiscent of the fable about the frog and the scorpion. The scorpion asks the frog to carry him across the river. The frog agrees, after the scorpion promises not to harm him. But mid-stream, he stings the frog, and they both drown. The scorpion explains, “I’m a scorpion. It’s in my nature to sting.”



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Putin hopes gas blockade will never happen again

Posted by the Editor on January 12, 2009

News / 12 January 2009 | 14:00

Putin hopes gas blockade will never happen again

The signed protocol on monitoring of gas transit is on its way to Brussels, where it should be signed by representatives of the European commission, RF prime minister Vladimir Putin informed.

 “Gazprom official flew to Kyiv and agreed the document with the Ukrainian side. Now the document is heading to Brussels,” Putin said.

The RF premier is sorry that Ukraine blocked the transit of gas to Europe and expressed his hopes that such blockade will never happen again, RIA Novosti reported.

He also expressed a hope that the control system will be effective and will provide uninterrupted gas  supplies to Europe.


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Tymoshenko: Gas transit to the EU countries is possible only if Russia provides process gas transit

Posted by the Editor on January 12, 2009

News / 12 January 2009 | 13:16

Tymoshenko: Gas transit to the EU countries is possible only if Russia provides process gas transit

Since January 1 this year Ukraine directed its own process gas to provide more stable gas transit to Europe. Prime Minister of Ukraine Yulia Tymoshenko told a briefing on the outcomes of talks with Czech Prime Minister Mirek Topolanek. “By today’s estimate this is above 70 million cubic meters of gas which Ukraine transported to stabilize the transit,” Yulia Tymoshenko stressed.

The Prime Minister of Ukraine also stated that transit to Europe is possible only if the Russian Federation provides it with process gas.

Yulia Tymoshenko assured that Ukraine would pay for this process gas after a contract of gas supplies and transit within the context of transit cost to be signed, “As soon as agreements are signed, Ukraine pays for the process gas”.


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Yushchenko’s team doubts Russia has gas

Posted by the Editor on January 12, 2009

News / 12 January 2009 | 12:29

Yushchenko’s team doubts Russia has gas

Russia’s behaviour regarding the situation with the gas supply to Ukraine and transit to Europe makes to think that Russia does not have that amount of gas it promised to supply. President’s representative on international energy security issues Bogdan Sokolovski expressed his opinion.

He underlined that Gazprom does not want to sign gas supply and transit contracts without any reasonable explanation, losing 120-150 million dollars daily.

According to Sokolovski, “there is no logic in Russia’s behaviour, and a question arises – may be they just don’t have enough gas, and they are ashamed to tell the world about this…”

 “I’ve come to the conclusion that they don’t have the necessary amount of gas they promised to supply. If I get an answer to the question why Russia agrees to lose money, like 120-150 million dollars daily, I will remove my doubts,” Sokolovski said.


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