Tuesday, January 24, 2006

International co-operation on gas

The Vice-speaker of the Russian Duma Vladimir Pekhtin told journalists today that: "European countries, not only Russia and Ukraine, should take part in negotiations concerning provision of full quotas of gas to western countries, [and they should] indicate non acceptability of theft of gas."

Comments in general, on Russia-Ukraine gas problems are becoming more measured and 'grown-up'. FT today reports that Russia has made special efforts to pump gas via lengthy alternative routes to ensure Georgia gets some gas as quickly as possible, even before the blown-up pipes are repaired - possibly some 'behind the scenes' PR work going on here. Ukrainian spokesmen have put their hand up and owned up to 'dipping' too, but have promised that delivery quotas will, nevertheless be adhered to. [I've not heard the ubiquitous and frequently-encountered 'Closed for technical reasons,' or 'Remont' excuse used, for explaining away the delivery shortfalls.]

It would seem sensible that for the benefit of everyone, that the system for transit of gas, from source to end-user should be in the hands of some multi-national institution of company, not subject to political manipulation of one country.

In an address to Ukrainians yesterday Yuschenko unequivocally said: "Ukraine is receiving Europe's cheapest fuel, while its gas transportation system remains in state ownership. There can be no discussion of its transfer to some other country or group of countries." PM Yekhanurov, said much the same, more wittily, in a recent TV interview: "He who gives up his gas transport system will have to dance to music played to him on a balalaika". He did however encourage and invite foreign partners to co-operate in developing any new pipelines through Ukraine. Both these statements were no doubt made with one eye on March's parliamentary elections.

In March 2004 President Yushchenko proposed the creation of an international consortium to build, own, and operate a new large-capacity gas pipeline from Turkmenistan via Kazakhstan and Russia to Ukraine and on to Western Europe, but it came to nothing because, as I wrote in an earlier posting: "this would have challenged Putin's plan of a Eurasian producers' cartel which would enable Russia to monopolize supply and dictate the price of gas delivered to European customers." Any possible foreign co-owners of Russian gas transportation systems would surely insist that Russian domestic consumers also contribute a fair price to system costs too.

So perhaps for Europeans it will be difficult to gain any control of existing pipelines, but for future pipeline projects between Russian gas fields and European markets, [which certainly will be required] they should collectively demand some input and control. A good place to start would be to ask Germany to have a rethink and cancel its planned expensive underwater Baltic pipeline, which bypasses Poland and the Baltic countries. For the same money a shiny new overland pipeline could be constructed direct from the gas fields to end users. Sadly I don't think it will happen, not while every player is just thinking of their own self-interest. So we can expect more of the same in Europe, in the cold winters to come.

ps I wonder if the finalized Ukraine-Russia gas deal really will be signed tomorrow. If it is, then maybe the whole affair will 'cool down' and the political players will 'chill-out'. [sorry]

Update: Just as I suspected, Ukraine and Russia have not been able to come to agreement on the creation of a JV [RosUkrEnergo] to provide Ukraine's gas requirements. It looks as if no signings will take place today.

5-iy Kanal report: 'The non signature of the agreements was explained as being due again to technical reasons.'

No comments: