Gazprom forms HQ for shutting off gas supply to
30.12.2008, 13.57
ITAR-TASS
MOSCOW, December 30 (Itar-Tass) - If Ukraine fails to settle its gas debt to Russia before January 1, next year, Russia’s natural gas monopoly Gazprom will have no grounds at all for supplying gas to the neighbouring republic, Gazprom head Alexei Miller said on the Vesti news television channel on Tuesday.
“The countdown (in hours) has already begun. If Ukraine before the end of the day on December 31 fails to settle its debt then Gazprom will have no grounds at all for supplying natural gas to Ukraine (in 2009). Gazprom has formed a response headquarters already today in order to act if the situation develops this way. The HQ has began its preparatory work,” Miller said.
“If Ukraine agrees to transfer to market prices then the gas price starting from January 1, 2009 will amount to 418 US dollars per 1,000 cubic metres,” he said. At present Gazprom is supplying gas to Ukraine at 179.5 US dollars per 1,000 cubic metres. The debt of Ukraine’s Naftogaz Ukrainy (Oil and Gas of Ukraine) for gas supplied in November and December is 2,118 billion US dollars with fines.
The Ukrainian debt – over 2 billion US dollars – is a considerable sum even for such a major corporation as Gazprom, its representatives stressed. Besides, the refusal of the Ukrainian side to settle the debt means that this money will not get into the Russian economy.
“We will have no legal grounds for the gas supply, and we will not be able to transfer to direct contracts with Ukraine until this debt is settled,” Gazprom spokesman Sergei Kupriyanov noted earlier. “There is no technical problem in shutting off gas supply from January 1,” he said. But we would not like to bring the situation to that because it casts shadow on us as a supplier [of gas to Europe]. Fortunately, Europe takes the situation with greater understanding now than it did in 2005-2006,” Kupriyanov added.
Gazprom and Naftogaz had several rounds of negotiations over the past month during which they considered various gas debt settlement variants, including a proposal of the Russian company to offset the Ukrainian debt in the form of an advance payment for the transit of Russian gas via the Ukrainian territory. However, the sides so far have failed to reach specific agreements. Gazprom has already informed its European colleagues about the current situation regarding the supplies and non-payments. Both Russia and Ukraine have assured their European consumers that there will be no disruptions in the gas deliveries to Europe. Under the gas transit contract concluded between Gazprom and Ukraine’s Naftogaz on January 4, 2006 for a term of five years, the Ukrainian side has an obligation to ensure the uninterrupted transit of Russian gas via its territory. This contract is not linked in any way with the contract on the supply of gas to Ukrainian consumers.
On October 2, the Russian and Ukrainian prime ministers signed a gas cooperation memorandum. A key provision of the memorandum allowed for signing long-term direct contracts between Gazprom and Naftogaz Ukrainy starting from January 1, 2009. Gazprom retained the possibility of the annual direct selling of 7.5 billion cubic meters of gas to Ukrainian customers.
The document also confirmed the intention of a gradual switch to economically founded and coordinated market gas prices and gas transit charges. The plans were conditioned on the Ukrainian repayment of gas debts.
Russia’s gas giant Gazprom believes Ukraine will fail to settle its gas debt before the end of the year, Gazprom spokesman Sergei Kupriyanov said in an interview with Echo of Moscow radio on December 27. Gazprom is well aware that Naftogaz Ukrainy cannot pay out of its own funds, Kupriyanov said.
The spokesman also said that in the remaining few days before the end of the year, Gazprom and Kiev would look for “other means” to settle Ukraine’s debt, in order to continue gas supplies to Ukraine starting from January 1. According to the Russian gas giant, Ukraine’s debt at the present moment exceeds two billion dollars. “We are looking for possible schemes to solve the problem of Ukraine’s debt,” he said, explaining that it could be “an advance payment for transit.”
Despite the difficulty of the situation, the sides still hope to settle the debt problem before the end of the year. According to Kupriyanov, chances to agree are “fifty-fifty.” “It is necessary for us to settle the situation on the whole. There is an opportunity for that, and we are working in that direction,” the Gazprom spokesman said. However, referring to the confidential nature of negotiations, he declined to give concrete variants of settling the problem.
Meanwhile, Gazprom does not rule out that if the sides fail to settle the problem before midnight December 31, and gas deliveries will be stopped, Ukraine could start siphoning off gas intended for European consumers.
According to Kupriyanov, Gazprom has already warned its European colleagues about it. A letter, signed by Gazprom head Alexei Miller and sent to European consumers, says about it. “The wording is more careful, but the main point is this,” the spokesman admitted.
Kupriyanov also noted that he was not ready to say the price at which Ukraine (if it pays off the debt) would be able to buy gas in 2009, but stressed that in any case it would be higher than the current price of 179.5 dollars per 1,000 cubic metres of gas.
Ukraine bears responsibility for ensuring transit of Russian gas to Europe in full volume, Kupriyanov said at a press conference earlier. Both technological and juridical responsibility rests with Ukraine, Kupriyanov noted in reply to a question asked by a Hungarian journalist who wondered if Gazprom would manage to ensure gas supply in the negotiated volume to Europe, while a contract on gas supply to Ukraine had not been signed yet.
Deputy chairman of the Russian gas giant Alexander Medvedev told the press conference that it was not a problem of Russain-Ukrainian relations only. “Colleagues from Europe have been discussing with Ukraine what it should do to join NATO, but they have no time to discuss Ukraine’s economic condition,” Alexander Medvedev said. Both in 2005 and 2006 there was a problem of “Ukraine’s unauthorized connection to the export pipeline. The West should give its assessment of the fact that the Ukrainian leadership might have been allowed to do such things, but we would not like such things to happen again,” Medvedev said.
“Our responsibility as a gas exporter is to supply gas to Europe in fully negotiated volume. Afterwards, the responsibility for that rests with the transit country,” Alexander Medvedev said.