Yulka T. has every chance to win the current "gas war", according to an article in 'Gazeta po Kiyevski':
"Blows from the Kremlin's "gas bludgeon" on Ukraine are intensifying. First, on 3rd March, deliveries of gas decreased by almost 30%. On Tuesday evening Gazprom screwed down the gas valves 25% more, so in two days Ukraine is receiving less than half of normal supplies.
It's clear Moscow is using all means possible to pressurize Tymoshenko in order to retain the infamous gas mediators in the gas supply chain. There has been a co-ordinated information attack in the mass media supported by opposition Party of Regions, who are demanding the resignation of the premier, and also constant criticism by President Viktor Yushchenko, who is urging Tymoshenko's government to return to negotiations and speedily resolve the crisis, even though the President concedes Gazprom are not paying their fees for transit of gas through Ukraine.
However, in the psychological war with Gazprom, time may be on the side of Yulia T. hence the rapid, rather desperate ramping up of pressure by the Russian monopolist.
In Moscow they understand that either they succeed in crushing the Ukrainian premier after several decisive days, or it will be necessary to capitulate and lift the "gas blockade". The last thing they want is to negotiate with Tymoshenko in the imperious corridors the Kremlin.
Russian political scientist Stanislav Belkovskiy reckons Gazprom cannot artificially decrease the deliveries of gas to Ukraine for any great period of time. Gas production is a continuous process, and thus far, gas earmarked for delivery to Ukraine is being pumped into Russian underground depositories - but their capacity is limited. The other alternative is the costly and wasteful flaring off of gas into the atmosphere.
Belkovskiy is convinced the aim of this high-stakes game is to force the resignation of premier Tymoshenko, and to ensure a more compliant person is appointed PM.
Gazprom is hoping that Ukraine will be forced into unsanctioned siphoning off of gas intended for the European consumers, so creating an international scandal for "stealing" Russian gas. As a result, they will kill two birds with one stone. First, they will spoil Ukraine's image as reliable transit country, and secondly, Europe will apply huge pressurize on the intractable prime minister, via diplomatic channels, to settle with Gazprom.
At the moment there are sufficient reserves of gas in Ukraine, possibly even for a month. A source from MinPalEnerho [ministry of fuel and energy], has told 'Gazeta po Kiyevski' that there are sufficient resources to cover for undelivered imported gas. These comprise home-produced gas, and also fuel stored in Ukraine's own underground depositories belonging to structures not connected with the mediators "UkrGazEnergo" and "RosUkrEnergo".
The main thing is that "Naftohaz Ukrainy" are not yet considering yielding to the provocation by siphoning off Russian gas. And they intend to prove to Europe that Gazprom itself has not been paying for the transit of gas for two months now.
But things are not so rosy in Ukraine either. Naftohaz are already finding it necessary to reduce gas supplies to certain cities.
However, the Russian monopolist is daily losing more than $10 million from the decrease of the deliveries of gas to Ukraine. How far will the Kremlin goes in order to tame the obstinate Tymoshenko and get advantageous contracts - time will show."
LEvko considers much depends on how long Naftohaz has been preparing for this showdown, which they must have known was coming as soon as Tymoshenko became premier for a second time. Gazprom's hand would be a bit stronger if they were up-to-date with their payments for transit - after all rates were agreed long ago.
p.s. Tomorrow Tymoshenko will be in Brussels for a couple of days attending a women's conference. She will be meeting Condi Rice, the German minister of foreign affairs, the Finnish president, and the speaker of the Georgian parliament.
Showing posts with label Naftohaz. Show all posts
Showing posts with label Naftohaz. Show all posts
Wednesday, March 05, 2008
Saturday, February 09, 2008
Gas showdown imminent?
'Obozrevatel' runs this article following Friday's collapse of talks aimed at resolving the latest gas crisis between Russia's 'Gazprom' and Ukraine's 'Naftohaz Ukrainy'. Gazprom has stated, that deliveries of Russian gas to Ukraine will stop on Tuesday at 10.00 am Moscow time, if the Ukrainian side "does not regulate the situation around its debts".
Here are some portions:
Putin to decide fate of Tymoshenko's government?
Igor Didenko - the first Deputy Chairman of Naftohaz conducted negotiations on behalf of the government of Ukraine and his company.
Gazprom put forward five conditions, but details of these are not known. This means, in essence, Russia has presented Ukraine with an ultimatum: either the government of Ukraine satisfies these conditions, or the Ukrainian Kabmin will be is forced to acquire gas at worldwide prices - most likely, not from Gazprom.
Russian politicians and businessmen connected with the gas business say bluntly that President Vladimir Putin, and the management of Gazprom which he completely controls, will this time "go to the [bitter] end" with this.
It will be necessary for President of Ukraine Viktor Yushchenko to solve the gas problem in his negotiations with Putin. A high-ranking Russian government official stated without any reservations: "It is not possible to entrust the country to Yulia Tymoshenko. Running the government of Ukraine is not playing games with UESU [the energy company which Tymoshenko headed in the mid '90's]"
So, it is obvious, that the leadership of the Russian Federation has decided to use a gas map to finally decide the fate of the Tymoshenko government and the entire ruling coalition.
It is worthwhile noting that Yulia Volodymyrivna has herself 'set herself up' for this, since no one else asked to change the mediator for the acquisition of Russian gas. Specifically, it was from this that the gas crisis began.
When new Naftohaz chief Oleh Dubina opened the thick dossier on the transgressions of the management of Naftohaz, it never occurred to him that this would be the beginning of the disintegration of government, appointed by Tymoshenko.
'Russia Today's' 'take' on this story here
LEvko considers Putin will not gain any friends in Europe with these kind of deadlines...He should read the European newspapers from the 2005/2006 Russian/Ukrainian gas crisis. But hey, he doesn't care about that does he?
Here are some portions:
Putin to decide fate of Tymoshenko's government?
Igor Didenko - the first Deputy Chairman of Naftohaz conducted negotiations on behalf of the government of Ukraine and his company.
Gazprom put forward five conditions, but details of these are not known. This means, in essence, Russia has presented Ukraine with an ultimatum: either the government of Ukraine satisfies these conditions, or the Ukrainian Kabmin will be is forced to acquire gas at worldwide prices - most likely, not from Gazprom.
Russian politicians and businessmen connected with the gas business say bluntly that President Vladimir Putin, and the management of Gazprom which he completely controls, will this time "go to the [bitter] end" with this.
It will be necessary for President of Ukraine Viktor Yushchenko to solve the gas problem in his negotiations with Putin. A high-ranking Russian government official stated without any reservations: "It is not possible to entrust the country to Yulia Tymoshenko. Running the government of Ukraine is not playing games with UESU [the energy company which Tymoshenko headed in the mid '90's]"
So, it is obvious, that the leadership of the Russian Federation has decided to use a gas map to finally decide the fate of the Tymoshenko government and the entire ruling coalition.
It is worthwhile noting that Yulia Volodymyrivna has herself 'set herself up' for this, since no one else asked to change the mediator for the acquisition of Russian gas. Specifically, it was from this that the gas crisis began.
When new Naftohaz chief Oleh Dubina opened the thick dossier on the transgressions of the management of Naftohaz, it never occurred to him that this would be the beginning of the disintegration of government, appointed by Tymoshenko.
'Russia Today's' 'take' on this story here
LEvko considers Putin will not gain any friends in Europe with these kind of deadlines...He should read the European newspapers from the 2005/2006 Russian/Ukrainian gas crisis. But hey, he doesn't care about that does he?
Tuesday, January 15, 2008
New ally for Yulka in battle to eliminate RUE
Tymoshenko's KabMin is to propose a seasoned politician, one of Ukraine's biggest industrialists, Vitaliy Hayduk, for the currently vacant position of vice PM resonsible for the Fuel-Energy complex. The proposal is no surprise. I have written a small biography on the man before.
Today's "Ekonomicheskiye Izvestiya" includes this story, parts of which I've translated below, entitled: "Tymoshenko will receive another deputy"
"Mr. Hayduk was vice-premier responsible for the fuel and energy complex [PEK] previously - in 2003, in the first government of Viktor Yanukovych. He also had experience as the head of fuel department during premier Anatoliy Kinakh's stint as PM (November 2001 - November 2002), and was first Deputy Minister of PEK in Victor Yushchenkos' government in 2000).
At the beginning of 1998 Hayduk was offered chairmanship of the newly-created National stock compay "Naftohaz Ukrainy", but he turned it down. As a result [the notorious] Ihor Bakay got the job.
In January 2006 Hayduk turned down the post of vice-premier of PEK, even though President Yushchenko stated in the interview on four Ukrainian television channels on 30th December, 2005, that he signed an edict appointing him. The document was never published. Hayduk says that he turned down the post after the conclusion of the January 4th 2006 agreement between the Ukraine and Russia "on regulating relations in the gas sphere", [during that winter's gas crisis], because of the introduction of RosUkrEnergo into the gas delivery scheme. RosUkrEnergo is controlled by Russia's "Gazprom", and Ukrainian businessman to Dmytro Firtash. "I do not see any possibility, under the given circumstances, of working at that post.." he said.
Hayduk and Tymoshenko are united in their dislike of RosUkrEnergo. They can combine efforts in government to remove it from the gas delivery scheme. On Saturday Tymoshenko confirmed her intentions to enter into direct relations with "Gazprom", and also to liquidate the internal gas market monopolist "UkrGaz-Energo", owned in equal shares by "RosUkrEnergo" and "Naftohaz Ukrainy", which supplies gas entering Ukraine from Russia.
Liquidation of "UkrGas-Energo" should positively influence the financial state of "Naftohaz". The minister of PEK, Yuriy Prodan, even before his recent appointment to this post, stated that at present, in essence, instead of "Naftohaz", it is "UkrGaz-Energo" [only] that operates in the [Ukrainian gas] market: the previous government created "specific additional conditions of profitability" for the latter.
"The profitability of UkrGaz-Energo is provided at the expense of "Naftohaz". We have substantially worsened the financial state of "Naftohaz", since it does not earn anything on the domestic market and cannot even obtain it's share of the activity of "UkrGaz-Energo", said Mr. Prodan.
Other factors which have lead to he [dreadful] financial situation which "Naftohaz" is now in will become known on 10th February, when the the inter-departmental verification commission investigating "Naftohaz's"financial-economic activity during 2006-2007 and headed first vice- premier Oleksandr Turchinov, completes its work. [Will criminal charges be brought against any of the company's bosses, LEvko wonders?]
Among Hayduk's priorities will be to ensure Caspian oil flows through the Odessa-Brody pipeline in the European direction. At the moment Russian-British TNK-BP Urals oil is transported in the reverse direction [for further transport by sea through the Bosphorous]. At the end of last week the chairmen of two Western Ukrainian refineries wrote a letter to the President, to the prime minister, and to the chairman of "Naftohaz" with a request to make a decision on the "averse functioning of the Odessa-Brody oil pipeline". [Hayduk has always supported transporation of Caspian oil northwestward though this pipeline.]
LEvko considers that for Tymoshenko removal of the gas intermediaries and dealing direct with the gas producing countries has become almost a crusade. But she may well have influential allies in Gazprom who would like to see the back of RosUkrEnergo too.
Today's "Ekonomicheskiye Izvestiya" includes this story, parts of which I've translated below, entitled: "Tymoshenko will receive another deputy"
"Mr. Hayduk was vice-premier responsible for the fuel and energy complex [PEK] previously - in 2003, in the first government of Viktor Yanukovych. He also had experience as the head of fuel department during premier Anatoliy Kinakh's stint as PM (November 2001 - November 2002), and was first Deputy Minister of PEK in Victor Yushchenkos' government in 2000).
At the beginning of 1998 Hayduk was offered chairmanship of the newly-created National stock compay "Naftohaz Ukrainy", but he turned it down. As a result [the notorious] Ihor Bakay got the job.
In January 2006 Hayduk turned down the post of vice-premier of PEK, even though President Yushchenko stated in the interview on four Ukrainian television channels on 30th December, 2005, that he signed an edict appointing him. The document was never published. Hayduk says that he turned down the post after the conclusion of the January 4th 2006 agreement between the Ukraine and Russia "on regulating relations in the gas sphere", [during that winter's gas crisis], because of the introduction of RosUkrEnergo into the gas delivery scheme. RosUkrEnergo is controlled by Russia's "Gazprom", and Ukrainian businessman to Dmytro Firtash. "I do not see any possibility, under the given circumstances, of working at that post.." he said.
Hayduk and Tymoshenko are united in their dislike of RosUkrEnergo. They can combine efforts in government to remove it from the gas delivery scheme. On Saturday Tymoshenko confirmed her intentions to enter into direct relations with "Gazprom", and also to liquidate the internal gas market monopolist "UkrGaz-Energo", owned in equal shares by "RosUkrEnergo" and "Naftohaz Ukrainy", which supplies gas entering Ukraine from Russia.
Liquidation of "UkrGas-Energo" should positively influence the financial state of "Naftohaz". The minister of PEK, Yuriy Prodan, even before his recent appointment to this post, stated that at present, in essence, instead of "Naftohaz", it is "UkrGaz-Energo" [only] that operates in the [Ukrainian gas] market: the previous government created "specific additional conditions of profitability" for the latter.
"The profitability of UkrGaz-Energo is provided at the expense of "Naftohaz". We have substantially worsened the financial state of "Naftohaz", since it does not earn anything on the domestic market and cannot even obtain it's share of the activity of "UkrGaz-Energo", said Mr. Prodan.
Other factors which have lead to he [dreadful] financial situation which "Naftohaz" is now in will become known on 10th February, when the the inter-departmental verification commission investigating "Naftohaz's"financial-economic activity during 2006-2007 and headed first vice- premier Oleksandr Turchinov, completes its work. [Will criminal charges be brought against any of the company's bosses, LEvko wonders?]
Among Hayduk's priorities will be to ensure Caspian oil flows through the Odessa-Brody pipeline in the European direction. At the moment Russian-British TNK-BP Urals oil is transported in the reverse direction [for further transport by sea through the Bosphorous]. At the end of last week the chairmen of two Western Ukrainian refineries wrote a letter to the President, to the prime minister, and to the chairman of "Naftohaz" with a request to make a decision on the "averse functioning of the Odessa-Brody oil pipeline". [Hayduk has always supported transporation of Caspian oil northwestward though this pipeline.]
LEvko considers that for Tymoshenko removal of the gas intermediaries and dealing direct with the gas producing countries has become almost a crusade. But she may well have influential allies in Gazprom who would like to see the back of RosUkrEnergo too.
Friday, January 11, 2008
Tymoshenko tackles gas
"Gazeta po Kievski' runs a story explaining how Tymoshenko intends to keep gas prices low for domestic consumers, while tackling the shady middlemen that supply gas to Ukraine.
Below are [loosely translated] portions:
Tymoshenko squeezes the Kremlin's arm - will cheap fuel for 'kommunalki' [municipal requirements] be obtained from the intermediary company "UkrGazEnerho's" reserves?
Today the first serious offensive by prime minister Yulia Tymoshenko directed against the gas mediators, connected directly with Moscow, took place. The national commission for the regulation of electric power (NKRE) declared, that on 8th January it has set the quotas for sale of gas for the monopolist "UkrGazEnerho" at 5 billion cu.m. per year. For the company, which had earlier sold 30-40 billion cu.m. p.a. to industrial enterprises - this will represent multimillion financial losses. Experts consider Tymoshenko can now provide cheap gas for a minimum of half a year to provide 'kommunalky' with cheap gas, obtained from the reserves "UkrGazEnerho", located in Ukrainian underground depositories.
Lustre of "UkrGazEnerho" [contrasts with] the poverty of "Naftohaz Ukrainy"
First a note about the mediator "UkrGazEnerho" itself. It was created as one of the conditions of the signing of agreement between Russia and Ukraine which put an end to the "gas war" of winter 2005/2006 when Russia closed off the gas valves.
"UkrGazEnerho" was founded by two companies - National Joint Stock Company "Naftohaz Ukrainy", and the [infamous] intermediary "RosUkrEnergo" (50% of which belongs to "Gazprom"). It was determined, that the company would concern itself [with the more lucrative] deliveries of gas to industrial users in the Ukraine. But how much gas it had the right to sell was not specified.
The ex-head of "Naftohaz Ukrainy" Aleksey Ivchenko, noted to 'Gazeta po Kievski', that in the spring of 2006, the NKRE issued a licence to "UkrGazEnerho" for the sale of 5 billion cu.m. of gas only. The remaining gas they had to sell to "Naftohaz Ukrainy".
However, elections took place soon after. Because of the [intractable] squabble between the "orange factions", Yanukovych's team came to power, and the Minstry of Fuel and Energy team changed. During August 2006 the same NKRE approved an increase of the gas quota that could be sold to "UkrGazEnerho" to 10 billion cu.m. This despite, as Ivchenko noted, in reality "UkrGazEnerho" was selling about 40 billion cu.m of gas to industrialists annually.
So we have the following picture: "Naftohaz Ukrainy" was selling expensive imported gas at reduced rates for municipal needs to provide hot water and heating for the population. And despite the fact that bills were being paid, money was disappearing to the intermediaries. As a result, debts of "Naftohaz Ukrainy" to "RosUkrEnergo" for the supplied Central-Asian gas were growing, as were the debts of the middleman to "Gazprom". The situation came to a head during the autumn last year when a "gas debt" of 2 billion dollars owed to Russia came to light. It was necessary to pay for this with our gas from Ukraine's underground storage facilities. During the summer "Naftohaz Ukrainy" had 8 billion cu.m. of gas stored. Now - this has 'gone', according to the new head of the National Stock comany Oleh Dubina.
[In contrast] the financial picture at "UkrGazEnerho" was excellent. Industrial consumers are forced to agree to buy gas at any declared price, considerably higher than the price for the population. And if bills were not paid in time, the principle "no payment - no gas", was applied. The company made multi-million profits, and as a result, the Russian "Gazprom" profited rather well too.
By giving approval to NKRE to "screw down "UkrGazEnerho", Tymoshenko solves several problems. First she provides 'recognition' to the businesses that supported her , and secondly there will be low tariffs for citizens' municipal services' gas consumption.
Firstly, the fundamantal portion of gas to industrialists will now be supplied by "Naftohaz Ukrainy", probably at prices lower than those proposed by "UkrGazEnerho". Furthermore, the industrialists will have an alternative, in contrast to the previous years.
Benefits from the innovations of lady Yu will be accrued e.g. by the Industrial Union of Donbass (ISD), headed by Vitaliy Hayduk. This is not for free - according to the information gained by "Gazeta po Kievski", they sponsored BYuT during last year's prematurely-called parliamentary elections. And Oleh Dubina, an associate of Hayduk, was appointed head of "Naftohaz Ukrainy".
Secondly, Tymoshenko has now, at the beginning of the year, started her campaign to displace intermediaries from gas deals between the Ukraine and Russia. This will ensure she will be better prepared for the complex talks with Russia on the price of gas for 2009.
Experts consider that lady Yu has acted correctly by tightening the screws on "UkrGazEnerho" gradually. But it does not deprive them of the license to sell gas, which could have caused an international scandal and heightened the desire of Russia to re-examine price for the current year. It is clear though that as a result of the quotas introduced, "Gazprom" will lose money, for which it will eventually present a bill to Tymoshenko.
Thirdly, Yulia Volodymyrivna has prepared a trap for "UkrGazEnerho" - the gas exists, but cannot be sold.
It's a simple scheme. There are approximately 30 bn cu.m. of gas in the Ukrainian underground depositories right now. If we believe the management of the National stock company, none of this belongs to Ukraine, i.e. the gas there is owned in essence by "RosUkrEnergo" and "UkrGazEnerho". Let's assume at least half - 15 billion cu.m. belongs to "UkrGazEnerho". But now they can sell only 5 billion cu.m. What can they now do with the remaining 10 billion?
An expert, Yelena Viter, notes export to Europe would be the most favoured version, but lady Yu can close off this path legislatively. Anyhow, transit pipes to the West are the property of the state.
The other option remains the sale of this gas to "Naftohaz Ukrainy" - at the low rates of 2006 as a fuel for municipal market. Everything is brilliant and simple. Not without reason has Yulia Voldymyrivna "froze" any increase in the price of the gas to the 'kommunal'shchikiv' for 2008, and also, therefore, tariffs to the population. Compensation from the budget will hardly cover any increase in the price of imported gas to 180 dollars per thousand cu.m.
While the authorities re-engineer their different gas schemes, which they themselves concocted, to us, to simple Ukrainians, only one matter is important - that the price of heating and hot water does not rise. What methods Tymoshenko acheives this by is of little interest."
-----------------------------------------------------------------------------------
The response from "UkrGasEnerho has been swift. An article from today's "Ekonomicheskiye Ivestia" entitled "NKRE has opened door to gas traders" provides details. Here are some portions:
The national commission for the regulation of electro-energy (NKRE) has decided to liquidate the monopoly of the joint enterprise "UkrGazEnerho" on the internal gas market by limiting the deliveries of fuel by the company at uncontrolled tariffs. Now instead of 32 billion cu.m of gas per year, UkrGazEnerho will only be able to supply its consumers with 5.04 billion cu. m.
Member of UkrGazEnerho supervisory council Andriy Halushchak considers that such limitations will lead to the destabilization of gas market, and that they are incorrect and could negatively affect the 'fulfillment of the gas balance'. At UkrGazEnerho they fear the decision of the NKRE means the terms of fulfillment of obligations on transit of Russian gas to the countries the European Union will be broken.
The NKRE justified the legality of their decision by the fact that UkrGazEnerho is a structure affiliated to "Naftohaz Ukrainy". According to Ukrainian legislation, the total share a business group possesses in the market for gas cannot exceed 35%. Taking into account the acting licences on the delivery of gas for other enterprises of "Naftohaz Ukrainy," the remaining volume of gas for UkrGazEnerho is 5,04 billion cu.m ".
The NKRE ruling implies that UkrGazEnerho will have spare gas, but the company will not will have the rights to deliver it to its consumers. According to the head of NKRE, Mr. Valeriy Kal'chenko, "The remaining volumes of gas UkrGazEnerho can be turned over to other suppliers at uncontrolled tariffs".
One expert considers the purpose of the actions of the NKRE is to create conditions that will stimulate revival of gas traders who will earn money on the resale of gas from the importer to end user. Because of this, its cost will grow.
LEvko says, as one door [or valve] closes, another one opens..
"All the rich people in Ukraine made their money on Russian Gas" - Ihor Bakai, 1998
Below are [loosely translated] portions:
Tymoshenko squeezes the Kremlin's arm - will cheap fuel for 'kommunalki' [municipal requirements] be obtained from the intermediary company "UkrGazEnerho's" reserves?
Today the first serious offensive by prime minister Yulia Tymoshenko directed against the gas mediators, connected directly with Moscow, took place. The national commission for the regulation of electric power (NKRE) declared, that on 8th January it has set the quotas for sale of gas for the monopolist "UkrGazEnerho" at 5 billion cu.m. per year. For the company, which had earlier sold 30-40 billion cu.m. p.a. to industrial enterprises - this will represent multimillion financial losses. Experts consider Tymoshenko can now provide cheap gas for a minimum of half a year to provide 'kommunalky' with cheap gas, obtained from the reserves "UkrGazEnerho", located in Ukrainian underground depositories.
Lustre of "UkrGazEnerho" [contrasts with] the poverty of "Naftohaz Ukrainy"
First a note about the mediator "UkrGazEnerho" itself. It was created as one of the conditions of the signing of agreement between Russia and Ukraine which put an end to the "gas war" of winter 2005/2006 when Russia closed off the gas valves.
"UkrGazEnerho" was founded by two companies - National Joint Stock Company "Naftohaz Ukrainy", and the [infamous] intermediary "RosUkrEnergo" (50% of which belongs to "Gazprom"). It was determined, that the company would concern itself [with the more lucrative] deliveries of gas to industrial users in the Ukraine. But how much gas it had the right to sell was not specified.
The ex-head of "Naftohaz Ukrainy" Aleksey Ivchenko, noted to 'Gazeta po Kievski', that in the spring of 2006, the NKRE issued a licence to "UkrGazEnerho" for the sale of 5 billion cu.m. of gas only. The remaining gas they had to sell to "Naftohaz Ukrainy".
However, elections took place soon after. Because of the [intractable] squabble between the "orange factions", Yanukovych's team came to power, and the Minstry of Fuel and Energy team changed. During August 2006 the same NKRE approved an increase of the gas quota that could be sold to "UkrGazEnerho" to 10 billion cu.m. This despite, as Ivchenko noted, in reality "UkrGazEnerho" was selling about 40 billion cu.m of gas to industrialists annually.
So we have the following picture: "Naftohaz Ukrainy" was selling expensive imported gas at reduced rates for municipal needs to provide hot water and heating for the population. And despite the fact that bills were being paid, money was disappearing to the intermediaries. As a result, debts of "Naftohaz Ukrainy" to "RosUkrEnergo" for the supplied Central-Asian gas were growing, as were the debts of the middleman to "Gazprom". The situation came to a head during the autumn last year when a "gas debt" of 2 billion dollars owed to Russia came to light. It was necessary to pay for this with our gas from Ukraine's underground storage facilities. During the summer "Naftohaz Ukrainy" had 8 billion cu.m. of gas stored. Now - this has 'gone', according to the new head of the National Stock comany Oleh Dubina.
[In contrast] the financial picture at "UkrGazEnerho" was excellent. Industrial consumers are forced to agree to buy gas at any declared price, considerably higher than the price for the population. And if bills were not paid in time, the principle "no payment - no gas", was applied. The company made multi-million profits, and as a result, the Russian "Gazprom" profited rather well too.
By giving approval to NKRE to "screw down "UkrGazEnerho", Tymoshenko solves several problems. First she provides 'recognition' to the businesses that supported her , and secondly there will be low tariffs for citizens' municipal services' gas consumption.
Firstly, the fundamantal portion of gas to industrialists will now be supplied by "Naftohaz Ukrainy", probably at prices lower than those proposed by "UkrGazEnerho". Furthermore, the industrialists will have an alternative, in contrast to the previous years.
Benefits from the innovations of lady Yu will be accrued e.g. by the Industrial Union of Donbass (ISD), headed by Vitaliy Hayduk. This is not for free - according to the information gained by "Gazeta po Kievski", they sponsored BYuT during last year's prematurely-called parliamentary elections. And Oleh Dubina, an associate of Hayduk, was appointed head of "Naftohaz Ukrainy".
Secondly, Tymoshenko has now, at the beginning of the year, started her campaign to displace intermediaries from gas deals between the Ukraine and Russia. This will ensure she will be better prepared for the complex talks with Russia on the price of gas for 2009.
Experts consider that lady Yu has acted correctly by tightening the screws on "UkrGazEnerho" gradually. But it does not deprive them of the license to sell gas, which could have caused an international scandal and heightened the desire of Russia to re-examine price for the current year. It is clear though that as a result of the quotas introduced, "Gazprom" will lose money, for which it will eventually present a bill to Tymoshenko.
Thirdly, Yulia Volodymyrivna has prepared a trap for "UkrGazEnerho" - the gas exists, but cannot be sold.
It's a simple scheme. There are approximately 30 bn cu.m. of gas in the Ukrainian underground depositories right now. If we believe the management of the National stock company, none of this belongs to Ukraine, i.e. the gas there is owned in essence by "RosUkrEnergo" and "UkrGazEnerho". Let's assume at least half - 15 billion cu.m. belongs to "UkrGazEnerho". But now they can sell only 5 billion cu.m. What can they now do with the remaining 10 billion?
An expert, Yelena Viter, notes export to Europe would be the most favoured version, but lady Yu can close off this path legislatively. Anyhow, transit pipes to the West are the property of the state.
The other option remains the sale of this gas to "Naftohaz Ukrainy" - at the low rates of 2006 as a fuel for municipal market. Everything is brilliant and simple. Not without reason has Yulia Voldymyrivna "froze" any increase in the price of the gas to the 'kommunal'shchikiv' for 2008, and also, therefore, tariffs to the population. Compensation from the budget will hardly cover any increase in the price of imported gas to 180 dollars per thousand cu.m.
While the authorities re-engineer their different gas schemes, which they themselves concocted, to us, to simple Ukrainians, only one matter is important - that the price of heating and hot water does not rise. What methods Tymoshenko acheives this by is of little interest."
-----------------------------------------------------------------------------------
The response from "UkrGasEnerho has been swift. An article from today's "Ekonomicheskiye Ivestia" entitled "NKRE has opened door to gas traders" provides details. Here are some portions:
The national commission for the regulation of electro-energy (NKRE) has decided to liquidate the monopoly of the joint enterprise "UkrGazEnerho" on the internal gas market by limiting the deliveries of fuel by the company at uncontrolled tariffs. Now instead of 32 billion cu.m of gas per year, UkrGazEnerho will only be able to supply its consumers with 5.04 billion cu. m.
Member of UkrGazEnerho supervisory council Andriy Halushchak considers that such limitations will lead to the destabilization of gas market, and that they are incorrect and could negatively affect the 'fulfillment of the gas balance'. At UkrGazEnerho they fear the decision of the NKRE means the terms of fulfillment of obligations on transit of Russian gas to the countries the European Union will be broken.
The NKRE justified the legality of their decision by the fact that UkrGazEnerho is a structure affiliated to "Naftohaz Ukrainy". According to Ukrainian legislation, the total share a business group possesses in the market for gas cannot exceed 35%. Taking into account the acting licences on the delivery of gas for other enterprises of "Naftohaz Ukrainy," the remaining volume of gas for UkrGazEnerho is 5,04 billion cu.m ".
The NKRE ruling implies that UkrGazEnerho will have spare gas, but the company will not will have the rights to deliver it to its consumers. According to the head of NKRE, Mr. Valeriy Kal'chenko, "The remaining volumes of gas UkrGazEnerho can be turned over to other suppliers at uncontrolled tariffs".
One expert considers the purpose of the actions of the NKRE is to create conditions that will stimulate revival of gas traders who will earn money on the resale of gas from the importer to end user. Because of this, its cost will grow.
LEvko says, as one door [or valve] closes, another one opens..
"All the rich people in Ukraine made their money on Russian Gas" - Ihor Bakai, 1998
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