tag:blogger.com,1999:blog-8086033.post113654966837467016..comments2023-11-05T13:07:03.784+02:00Comments on foreign notes: Successful?Scott W. Clarkhttp://www.blogger.com/profile/04047386631227542689noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-8086033.post-1136658800293743222006-01-07T20:33:00.000+02:002006-01-07T20:33:00.000+02:00Many are labeling Russia’s pressure on Ukraine to ...Many are labeling Russia’s pressure on Ukraine to pay market prices for natural gas as “Cold War” tactics. Of course, the Ukrainian government is paying the full price for their anti-Russian rhetoric and pro-Western orientation. Russia is flexing the only muscles she has: natural resources. But, it’s not so much a message to the Ukraine as to the West. And it’s not so much “Cold War” as Realist geo-politics.<BR/><BR/>Putin quickly realized that Russia only has one card to play in today’s world of growing demand for natural resources. Domestically, this realization became clear with the takeover of the Yukos oil company. Disguised as retribution for legal transgressions, Putin removed the threat of a western-oriented Yukos<BR/>by imprisoning its managers, and paved the way for a predictable government takeover of Russia’s oil industry. Today, it is not so clear what the rules of oil investment are (i.e. no foreigner shall hold majority stock in a Russian oil company), but it is very clear who makes the rules.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8086033.post-1136584891431201732006-01-07T00:01:00.000+02:002006-01-07T00:01:00.000+02:00Hi Scott - I've been doing some back-of-envelope c...Hi Scott - I've been doing some back-of-envelope calculations on the gas deal signed between Gazprom and Naftogaz. According to Anders Aslund [who, incidentally reckons Ukraine got a cracking deal] Ukraine's bill for imported gas in 2005 was $2.9M. He assumes this year's total import requirement will be about 60Bcm, about the same as last year. <BR/><BR/>Had both parties agreed at the price Gazprom wanted in the fall of last year of $160/Thousand c.m. the bill for imported gas would have been as follows: [I assume the total import requirements would have been split 17Bcm from Gazprom, 43Bcm from Turkmenistan, as quoted in the new contract]:<BR/>17X160 = $2.7Bn + 43X50 = $2.15Bn i.e. Total $4.85Bn. But to this has to be added cost of transporting Turkmen gas to Ukraine, $800M, according to Aslund, so total cost would have been $5.65Bn<BR/><BR/>With this week's agreement in place the bill for 2006 will now be 60X$95 = $5.7Bn <BR/><BR/>[1] I assume that Ukrainian earnings from transit of gas through Ukraine and destined for Europe would have been the same, had agreement been made last fall, as the earnings from transit in the deal reached a few days ago]. <BR/>[2] According to Aslund, the $95 price includes delivery to Ukraine's borders.<BR/><BR/>Sure, I've made some assumptions on the numbers, and now Gazprom's proxy RosUkrEnergo will be now doing the business at the Turkmen end. But all that Kremlin/Gazprom got is what they wanted in the first place, and in order to get it, they have paid a huge price on the international stage. Ukraine now faces a hefty doubling of its bill for imported gas.<BR/><BR/>I've read the new contract between Gazprom and Naftogaz. It's at http://www.pravda.com.ua/news/2006/1/5/37345.htm I wonder what your opinion of it is, Scott. I would have imagined that after the last few weeks’ shenanigans, an army of Ukrainian lawyers would have scrutinized every detail before signing. To me, a mere layman in these matters, it seems a laughable document. E.g. it clearly states that the $95 price is for the first half of 2006 only, so where does the 5 years that everyone talks about come from? And the price for 17Bcm of Russian gas will be determined by a formula where Po = $230, but where's the formula? There are no delivery schedules, and no penalty clauses. Why use middlemen? As Ukrainians say, 'There's a dead dog buried there, somewhere'.<BR/><BR/>As many others have stated including Yulia Tymoshenko, the new middleman has no pipelines, no gas fields, nothing. If they go 'belly up', what then? It seems that this contract was cobbled together overnight as a face-saving fig-leaf for Putin. Placing responsibility for all of Ukraine's gas imports into the hands of a dubious middleman surely casts serious doubts on the integrity of Yushchenko and his administration. <BR/><BR/>Incidentally, the above-mentioned 'Ukrainska Pravda' web page also carries a copy of the contract between Gazprom and Naftogaz Ukrainy dated 9th August 2004, agreeing to fix the price of gas delivered to Ukraine at $50/thousand c.m. and a transit rate of $1.09 until 2009. If Gazprom did not adhere to that contract, why should they be trusted on the new one?LEvkohttps://www.blogger.com/profile/01000312831734960442noreply@blogger.comtag:blogger.com,1999:blog-8086033.post-1136584776019890632006-01-06T23:59:00.000+02:002006-01-06T23:59:00.000+02:00Hi Scott - I've been doing some back-of-envelope c...Hi Scott - I've been doing some back-of-envelope calculations on the gas deal signed between Gazprom and Naftogaz. According to Anders Aslund [who, incidentally reckons Ukraine got a cracking deal] Ukraine's bill for imported gas in 2005 was $2.9M. He assumes this year's total import requirement will be about 60Bcm, about the same as last year. <BR/><BR/>Had both parties agreed to the price Gazprom wanted in the fall of last year of $160/Thousand c.m. the bill for imported gas would have been as follows: [I assume the total import requirements would have been split 17Bcm from Gazprom, 43Bcm from Turkmenistan, as quoted in the new contract]:<BR/>17X160 = $2.7Bn + 43X50 = $2.15Bn i.e. Total $4.85Bn. But to this has to be added cost of transporting Turkmen gas to Ukraine, $800M, according to Aslund, so total cost would have been $5.65Bn<BR/><BR/>With this week's agreement in place the bill for 2006 will now be 60X$95 = $5.7Bn <BR/><BR/>[1] I assume that Ukrainian earnings from transit of gas through Ukraine and destined for Europe would have been the same, had agreement been made last fall, as the earnings from transit in the deal reached a few days ago]. <BR/>[2] According to Aslund, the $95 price includes delivery to Ukraine's borders.<BR/><BR/>Sure, I've made some assumptions on the numbers, and now Gazprom's proxy RosUkrEnergo will be now doing the business at the Turkmen end. But all that Kremlin/Gazprom got is what they wanted in the first place, and in order to get it, they have paid a huge price on the international stage. Ukraine now faces a hefty doubling of its bill for imported gas.<BR/><BR/>I've read the new contract between Gazprom and Naftogaz. It's at http://www.pravda.com.ua/news/2006/1/5/37345.htm I wonder what your opinion of it is, Scott. I would have imagined that after the last few weeks’ shenanigans, an army of Ukrainian lawyers would have scrutinized every detail before signing. To me, a mere layman in these matters, it seems to be a laughable document. E.g. it clearly states that the $95 price is for the first half of 2006 only, so where does the 5 years that everyone talks about come from? And the price for 17Bcm of Russian gas will be determined by a formula where Po = $230, but where's the formula? There are no delivery schedules, and no penalty clauses. Why use middlemen? As Ukrainians say, 'There's a dead dog buried there, somewhere'.<BR/><BR/>As many others have stated including Yulia Tymoshenko, the new middleman has no pipelines, no gas fields, nothing. If they go 'belly up', what then? It seems that this contract was cobbled together overnight as a face-saving fig-leaf for Putin. Placing responsibility for all of Ukraine's gas imports into the hands of a dubious middleman surely casts major doubts on the integrity of Yushchenko and his administration. <BR/><BR/>Incidentally, the above-mentioned 'Ukrainska Pravda' web page also carries a copy of the contract between Gazprom and Naftogaz Ukrainy dated 9th August 2004, agreeing to fix the price of gas delivered to Ukraine at $50/thousand c.m., and a transit rate of $1.09 until 2009. If Gazprom did not adhere to that contract, why should they be trusted on the new one?LEvkohttps://www.blogger.com/profile/01000312831734960442noreply@blogger.com