2009

20 January 2009:

At 10:05 hours Ukraine began to transit Russian gas to Europe.

Speaking to journalists during a conference call today Gazprom's Deputy CEO Alexander Medvedev confirmed that contracts had been signed with Ukraine for both the supply of gas to the Ukraine and transit of Russian gas to Europe: 

• The signing of the contracts, both of which cover 10-year terms, is a major achievement.

• 2009 is the last year of discounted prices for natural gas as well as special transit rate for transit via Ukraine. In 2010, Ukraine will pay European prices for supply and Gazprom will pay European prices for transit.

• Assuming Ukraine's future compliance with the contracts, there should never be a repeat of this winter's situation (interruption of transit supplies to Europe). Both contracts contain internal mechanisms to prevent non-compliance, including a clause covering advance payment in the event of lack of payment by Ukraine for the gas it receives.

• Today, in accordance with the agreements, the flow of natural gas from Russia to Europe started at 10am. Today, the volume should reach 423.8 million cubic metres of gas.

• Gazprom reserves the right to claim for any damages suffered over the last month, but in respect of the supply and transit contracts and outstanding debts, Gazprom and Ukraine have found a solution to settle the dispute.

• Following the agreement of new contracts, there is no need for the monitoring system to continue. Unfortunately the function of the international monitoring system was not performed in full, with monitors unable to enter Ukraine's underground storage facilities to assess the situation.

• In 2009 the average price paid by Ukraine will be below $250/1000cm, given the falling price of crude oil and oil products. European customers are likely to pay around $280/1000cm. In 2010, the transit rate will increase to a level of around $2.50 per 1000cm per 100km, so Ukraine's transit revenues of Ukraine will increase by about 50%, given the current forecast of natural gas prices. 

• Over the period of the dispute Gazprom lost approximately $100m per day as a result of not being able to supply its European customers, but the company believes that a substantial part of these losses will be covered over the coming days and months due the need to refill underground storage facilities and the high level of demand from customers. Gazprom's investment programme has not been affected and projects such as Nord Stream, Shtokman and Yamal will continue as planned.

• The dispute has emphasised the need for South Stream - it is clear that the sooner this diversification of transit routes takes place, the better for Europe. This is not only in respect of political risk, but also technical risk.

19 January 2009:

Gazprom and Naftogas Ukrainy sign long-term gas deals.

18 January 2009:

Sergei Kupriyanov said that In accordance with the understandings that were reached by the heads of governments of Russia and Ukraine, Gazprom and Naftogaz are preparing to sign a contract for the supply of gas for Ukrainian consumers, and an agreement concerning the transit of gas.

17 January 2009:

Gazprom sent another request to the Naftogaz Ukrainy United Dispatching Center for the transit of 99.2 million cubic meters of gas a day starting from 10.00 via the Sudja gas metering station. The Ukrainian answer was again negative.

16 January 2009:

Gazprom hosted media representatives at its Central Dispatch Center.

Gazprom's Deputy CEO Alexander Medvedev today spoke to international journalists in a conference call:

• Gazprom and Eni will form part of an international consortium to buy and own the gas needed for technical purposes (to replace the gas missing from the pipeline system and to fuel the compressor stations); Gaz de France and E.ON Ruhrgas are positively considering entering into the consortium and the invitation to join is extended to all companies that should receive Russian gas supplied via Ukraine.

• This innovative solution has been proposed as the latest in a series of attempts by Gazprom to do everything it can to get gas flowing to its European customers.  It involves Gazprom and its European partners sharing the financial risk associated with the provision of this significant volume of gas in order to unblock the current impasse, despite the fact that Ukraine has the clear responsibility to provide technical gas. 

• The paperwork for the consortium is being drawn up as we speak and could be in place very rapidly.

• The companies within the consortium would jointly buy the gas at a market rate of around $450 per 1000cm, which is still cheaper than what many of the European customers pay today.  

• Ukraine's refusal to transit gas to Europe had, up to yesterday, resulted in losses by Gazprom of around $1.1 billion, excluding additional costs associated with the management of the companies upstream production and storage systems as a result of the failure to transit gas to Europe.

Naftogaz Ukrainy rejects its own proposal for gas transit to Europe:

• Yesterday Gazprom received from the Unified Dispatcher Department (ODU) of Naftogaz Ukrainy a proposal to supply through GIS Sudzha for transit via Ukrainian territory to Europe 99.2 million cubic meters of gas per day. Gazprom accepted the ODU proposal and forwarded today at 02:00 hours an application for the transit of Russian gas to Europe through the territory of Ukraine.

• However, Naftogaz Ukrainy rejected its own proposal, which it submitted several hours before.

• At the same time Russian observers were barred from the earlier agreed monitoring points - Ukrainian underground gas storages and ODU.

15 January 2009:

In a scheduled meeting in Moscow today Gazprom CEO Mr Miller, Prime Minister Mr Putin and Eni CEO Mr Scaroni, the Russian side proposed an innovative solution to end the current gas transit crisis:

• The proposal calls for major European energy firms to form a consortium of gas importers that would buy the technical gas from OAO Gazprom needed to deliver natural gas via Ukraine to European customers.

• In a telephone call earlier today with Ukraine's President Yuschenko, Russian President Dmitry Medvedev had proposed an innovative solution to enable Gazprom to resume transiting supplies of gas to European customers via Ukraine.  The proposal was then discussed today in a telephone conversation between Prime Minister Putin and Italian Prime Minister Berlusconi.

• Putin said that from Gazprom's side the flow of gas was open, but despite all of its efforts, and all of the requests from European partners Ukraine had continued to refuse Gazprom's daily requests to transit gas to Europe. 

• Ukraine had said it was technically incapable of allowing Russian gas to reach Europe unless it received 1.7bcm of gas for technical purposes, partly to refill the pipeline system and partly to fuel the compressor stations along its network.  Whilst Putin called the request for Gazprom to transfer ownership of this significant and expensive amount of gas to Ukraine absurd, he said that Russia had to help Ukraine.

• Whilst Russia was not able to take all the financial risks of providing this large volume of gas alone, it was proposing to major European partners and customers that they join together to form a consortium which would share the cost and ownership of the technical gas, which would be supplied to Ukraine to enable the resumption of supplies to Europe.    

• Ukraine would promise to pay for this gas once a price had been agreed upon.  Until then, the gas would remain the property of the international consortium in the hope that this would guarantee that it would not be illegally taken out of the Ukrainian transit system again.  It is hoped that this solution would prevent any further disruption of supplies of Russian gas to Europe.

• Scaroni called the proposal innovative and constructive, and underlined that this was a commercial rather than a political solution.  

• All other European companies who purchase Russian gas delivered via Ukraine, such as E.on Ruhrgas, will be invited to join such a consortium in the coming hours.  Such a consortium could be put together very rapidly.

• This initiative is the latest in a series of attempts by Gazprom to do whatever it can to make sure that European customers are receiving their gas.

Sergei Kupriyanov described a letter received from Naftogaz Ukrainy:

• Kupriyanov said that the letter indicated that there is a technical possibility to open Sudzhu and begin the transit of gas to European consumers. According to the document Naftogaz Ukrainy is ready to take 99.2 million cubic meters per day through GIS Sudzha, and divide these volumes partly for Moldova (13.9 mcm), partly to Orlovka (28 mcm) and partly in other direction, in particular, to Uzhhorod (57.3 mcm).  

• “This means that, in fact, there was a technical possibility to receive Russian gas into the Ukrainian system this entire time. There is no political decision to reopen the transit of Russian gas to Europe through Ukraine. And, despite receiving information from the dispatcher today that it is possible to take gas into the system, Naftogaz Ukrainy Chief Oleg Dubina in a telephone conversation today stated that they will not do so,” said Kupriyanov.

Today at 02:00 hours another application was forwarded to the Unified Dispatch Department of Naftogaz Ukrainy for the transit of 99.2 million cubic meters per day from 10:00 hours through GIS Sudzha.

• In response Gazprom again received a refusal to transit gas under the pretext of an absence of a technical agreement on the terms of gas supply-acceptance at bordering GIS for 2009.

• The absence of the technical agreement does not provide grounds for the cessation of the transit through the Ukrainian territory, as there is an acting transit contract for 2003-2013.

• In this connection Gazprom demands Naftogaz Ukrainy to immediately fulfill its contract obligations and intake the Russian gas into the Ukrainian transportation system for transit to European consumers.

• The tap on the export trunk line on the Ukrainian territory after GIS Sudzha is still closed.

14 January 2009:

Gazprom CEO Alexei Miller held a working meeting in the company's headquarters with Prime Minster of Bulgaria Sergei Stanishev, Prime Minster of Slovakia Robert Fico and Prime Minister of Moldova Zinaida Greceanii:

• “Today, during our meeting we discussed possible steps to resolve the crisis. In particular, the Slovak prime minister proposed a major swap transaction. It means Gazprom would supply gas to Ukraine for its internal needs in the amount of 20 million cubic meters per day, which is the amount necessary for Slovakia, while Ukraine, which has its underground storages located at the border with Slovakia, would supply the same amount of gas to Slovak consumers. Gazprom agrees to such a swap. Ukraine has to open the tap on its territory for that. Now it’s up to Ukraine. We have also agreed to consider how to implement a similar scheme for Moldova.  Unfortunately, it is impossible to make swap transactions with Bulgaria, as Ukraine has no underground gas storages in that direction," Alexei Miller said.

Gazprom attempted again today to transit gas to the Balkans, Moldova and Slovakia through the Sudzha pumping station, which provides the most direct route to those customers, but Naftogaz Ukrainy wanted gas to go to other pumping stations which mostly serve domestic Ukrainian pipelines:

• Ukraine also wanted Gazprom to pump in an extra 140 mcm of gas into the system to repressurize it – this is to replace the gas which was sitting in the pipelines when Gazprom ceased to be able to supply its European customers, and is now unaccountably missing, indicating those volumes have been illegally siphoned out of the system.

Reports of foreign monitors confirmed that Ukraine has blocked transit of Russian gas:

• Monitors of the international commission in Kiev Julius Skac (SPP a.s.), Sergei Bazaleyev (Gazprom export), Peter Jachorski (Estrim), Alain Rossiniol (Gaz de France Suez), Roberto Merlo (ЕU), signed an hourly report for gas pumping stations (form №1), which testified there is no pumping of Russian gas along Ukrainian transit gas pipelines towards Europe, while at the Sudja station in Kursk region monitors registered a 70-atmosphere pressure at the entrance to the gas transportation system of Ukraine.  

• Similar hourly report (form №1А), which also confirms the absence of any pumping of gas in the western direction, was signed by observers from the monitoring commission Johan Haumer (OMV) and Oleg Antonov (Gazprom export ) at Uzhgorod station.

13 January 2009:

Gazprom Deputy CEO Alexander Medvedev statement on Naftogaz Ukrainy’s refusal to transit gas through the Uzhhorod corridor:

• “Today, we received another refusal from Naftogaz Ukraine to our request to take in Russian gas into its system, this time through the Uzhhorod corridor. Naftogaz Ukrainy refused our request to transit through the GIS Sudzha - GIS Uzhhorod route 22.2 million cubic meters of gas per day to Slovakia, where the situation with gas supplies is particularly difficult. Naftogaz’ argument was the same as for blocking flows through the Balkan corridor: the requirement for some “long-term transit guarantees,” he said.

Gazprom Deputy CEO Alexander Medvedev and Gazprom Spokesman Sergey Kupriyanov spoke to journalists in Moscow:

• Gazprom has informed its European clients that it had declared force majeure on its European gas exports through Ukraine. "Today we sent our partners an announcement on force majeure," Alexander Medvedev said.

• "We hope the conflict over Russian gas transit via Ukraine will be solved as soon as possible, and then we will be able to increase the volumes of gas deliveries to make up for under-deliveries," Alexander Medvedev said.

• Alexander Medvedev said that Gazprom and its European partners will demand reimbursement from Ukraine for the halt in gas transit. "We will use the entire legal arsenal. Not only will we demand payment of damages, but many consumer countries will do that," he said.

• "Everyone sighed with relief yesterday, hoping that transit will begin. It was no accident that we started to send supplies for export through Sudzha. This is an export-oriented pipeline and has direct access to Bulgaria, Romania, Macedonia, and Turkey. Furthermore, we also expected to use the same route to send gas to Slovakia. Sudzha was the last pipeline through which we could still supply gas to Europe."

• "The Valuika and Pisarevka [gas measuring stations] are not export points, but they service Ukraine's domestic consumers. We have no intention to supply gas to Ukraine as no contract has been signed," said Alexander Medvedev, referring to the two stations proposed by the Ukrainian side.

• "We are faced with blocked export routes for Russian gas to Europe," Alexander Medvedev said.

• Gazprom has asked Ukraine to ship 76.6 million cubic meters to the Balkans and 22.2 million cubic meters to Slovakia tomorrow through Sudzha to Orlovka. However, Gazprom has not received a response from Ukraine.

• As a gesture of good will, Gazprom allowed EU monitors to Gazprom's central dispatch office. "Thus, the European experts will be able to obtain the same information as the management of Gazprom and personally observe the scene. This was done beyond the conditions of the agreement, as a gesture of good will."

• Gazprom has received a letter from the dispatch control of the TCU of Ukraine, in which it notified Gazprom that as of 1 January 2009 the Ukrainian system is working in an autonomous regime. "They were acting according to a plan. As the New Year came, the whole system was shifted to domestic consumption," Alexander Medvedev said.

• Sergey Kupriyanov said that Gazprom has received a letter from Naftogaz Ukrainy saying that in order to ensure transit to Europe, Gazprom must provide 140 million cubic meters. "It's written just like that: "to make up for transit volumes in the pipelines." That is, explicitly recognizing that they do not have that gas, and that is the only reason they are unable to ensure gas transit to our European customers."

• "It is often said that 36 hours is necessary for our gas to reach our European consumer. This could mean only one thing - our Russian gas, which was held in transit pipelines in Ukraine, has been stolen. This amount does not exist and our Ukrainian colleagues have openly spoken about this."

• "In reality, if the system is pressurized and the gas is there, as soon as we begin to deliver gas at the eastern border, the same volume should be immediately seen by out customers on the western border," Sergey Kupriyanov said.

• "What is happening now at the entrance to the Ukrainian TCU confirms that Ukrainian statements that they could not cut anything, that they do not have such technological capabilities, will not hold up to any criticism. This is exactly what's happening at the moment," Sergey Kupriyanov said.

• Alexander Medvedev said that Gazprom received a letter from the Ukrainian side saying that in order to restructure Ukraine's gas transportation system towards exports it was necessary to agree on the technical conditions for the transfer of gas and receive guarantees that gas will be transited for a long time. He noted that it was difficult to understand the requirements of the Ukrainian side, because there is a long-term contract to supply gas to all transit lines.

• Alexander Medvedev said that Ukraine has also requested that Gazprom supply 76.6 million cubic meters for domestic consumption. "These are the preconditions to restart the transit of gas, 140 million cubic meters here, 76 million cubic meters there and some kind of guarantees," Alexander Medvedev said.

• Alexander Medvedev said that Gazprom does not yet have information on the full amount of illegally siphoned off gas on the territory of Ukraine. Sergey Kupriyanov clarified, "We don't know yet how much was taken. That will be known after the work of monitors. And that will be possible when gas starts to flow."

• Sergey Kupriyanov said that Ukraine has already taken 140 million cubic meters just from the Balkan-oriented route. "We do not have information on what is happening in the other parts of the transportation system."

• Negotiations for 2009 gas supplies are not currently taking place despite Gazprom's readiness to do so.

• Sergey Kupriyanov recalled that Ukraine's debt before 1 January 2009 stood at $615 million, and it will grow based on how much was illegally taken. Additional fines and fees on that amount have also been incurred since 1 January 2009.

• Sergey Kupriyanov said that the transit state must provide its own technical gas pursuant to the existing contract between Gazprom and Naftogaz Ukrainy.

Gazprom Deputy CEO Alexander Medvedev gave a telebriefing on  the recent developments regarding the Ukraine-Russia gas situation:

• As agreed, Gazprom started gas transit from Russia to European customers this morning.

• But the gas could not enter Ukraine since the Ukrainian side kept the pipeline closed.

• So, Ukraine is blocking all Gazprom’s actions to resume the transit of natural gas to Europe through Ukraine.

• Ukraine has informed Gazprom it has taken out the gas intended for Europe from the pipeline system to use it for the local consumption.

• Ukraine informed Gazprom that they switched on autonomous regime exclusively for the local consumption of Ukraine. Already on January 1, Ukraine has switched their gas system exclusively to the local consumption.  

• In this situation, Gazprom has no physical way to supply gas to European consumers.

• Ukraine’s actions are outside the agreement with the EU, and the whole responsibility for the blockade of the gas deliveries to Europe fully lies on Ukraine.

• Ukraine did not allow international and Russian monitors to come to the underground storage locations nor to the dispatching centers of the Ukrainian system.

• Gazprom would like to see gas flowing to its European customers. It is already using the existing alternative pipelines (Blue Stream, Yamal1) and the underground storage facilities to compensate the loss of gas.

• Gazprom has informed the European Commission (Energy Commissioner Piebalgs) that it did not have the possibility to restart the gas deliveries to Europe. Gazprom will continue to inform the European Union about further developments.

According to the reached agreements, Gazprom resumed at 10:00 hours Moscow time today gas supplies to European consumers via Ukraine, which it was forced to halt at the fault of the Ukrainian side.

12 January 2009:

At a press conference in Brussels today, Gazprom's Deputy CEO Alexander Medvedev made the following points: 

• Gazprom will restore gas deliveries to Europe transited through Ukraine, tomorrow, Tuesday, 13 January, at 10am Moscow time, if no further problems occur.

• Gazprom expressed its gratitude to Jose Manuel Barroso, Andris Piebalgs and Mirek Topolanek for their help in reaching the agreement.

• Technical instructions for the monitoring process were agreed upon yesterday and the multilateral group of experts will be at five gas metering locations in Russia, as well as locations in Ukraine and EU countries, particularly in Slovakia and Romania.

• Gazprom underlined the importance of diversification of the gas routes to Europe and supports the establishment of a permanent international gas monitoring group.

• In terms of energy security, underground gas storage facilities are very important and Gazprom is working on developing them in Austria, France, Germany, UK and Belgium.

Gazprom Deputy CEO Alexander Medvedev spoke to journalist in Brussels:

• Alexander Medvedev said that Gazprom will restore gas deliveries to Europe transited through Ukraine Tuesday, 13 January, at 10am Moscow time, if no further problems occur.

Ukraine re-signed transit monitoring rules without additional remarks:

• "We held talks in Kiev this morning. After the talks the Ukrainian side signed the rules for monitoring natural gas transit via Ukraine without any additional remarks," Deputy Gazprom CEO Valery Golubev told reporters.

10 January 2009:

Alexei Miller’s Spoke Following an Agreement Between Russia and the EU to Create an International Monitoring Committee:

• "Deliveries of Russian gas through Ukrainian territory must begin as soon as possible, but now everything depends on Ukraine.” 

• Miller said that today's meeting between prime ministers of Russia and the Czech Republic is very important in terms of its results, because its outcome was the signing of a document that created a mechanism to monitor the transit of Russian gas through Ukrainian territory.

 

• He said that the signing of this document is a very timely step when Ukraine has blocked the supply of Russian gas to Europe.  

• "Our position is that this mechanism should begin working as quickly as possible. And today we can all say that we are ready for this work. One small detail remains- Ukraine must sign this document. The Prime Minister of the Czech Republic had already left for Kiev. Let’s hope that we will have good news from Kiev today," Miller said.

• He noted that the committee’s main task is to ensure that Russian gas gets to the western border of Ukraine. He noted that the document signed today specified that the information collected by the committee will be sent to Brussels, Moscow and Kiev. 

 

• He said that Alexander Medvedev and other experts from Gazprom will be part of the committee. Miller stressed that the signed document also provides for the full disclosure of the collected data to the press.

• "If [through the analysis provided by the committee] we see that Ukraine is stealing Russian gas…we will cut gas supplies to Ukraine by that amount.” 

• He also noted that Russia was prepared to allow monitors at its pumping stations.

• Once the monitoring committee ensures that there is no more theft of Russian gas on Ukrainian territory, Gazprom will quickly restore supplies.

• Gazprom has prepared everything for the speedy start of work by the international monitoring committee to monitor the transit of Russian gas through Ukraine. “Our airplanes are ready to quickly fly experts to the designated locations.”

Sergey Kupriyanov commented on Ukrainian supply of gas to Bulgaria and Moldova:

• “Gazprom welcomes the intention of the Ukrainian party to start natural gas supplies to Bulgaria and Moldova. These supplies are to compensate for the Russian gas Ukraine was illegally siphoning off from 1 to 7 January, 2009. The volume of supplies should be increased up to the volume of the Russian gas siphoned off in Ukraine and consigned for these countries,” said Gazprom spokesman Sergey Kupriyanov.

9 January 2009:

Ukrainian President Victor Yushchenko, Prime Minister of Ukraine Yulia Tymoshenko and Czech Prime Minister Mirek Topolanek met at the reception house of the Ukrainian head of state:

• Yulia Tymoshenko said that Ukraine is ready to sign the protocol proposed by Russia to establish a multilateral commission to monitor the transit of gas through Ukrainian territory. “We will sign such a protocol,” she told journalists after the meeting.

• Gazprom spokesman Sergey Kupriyanov said, “The protocol for the creation of a multilateral committee to monitor the transit of gas through the territory of Ukraine has not yet been signed. According to latest reports, the Ukrainian government was ready to sign the protocol. But it seems that President Yushchenko has not decided to sign it.”

Alexei Miller made a statement on the creation of a multilateral commission to monitor gas transit via Ukraine:

• "In case the multilateral commission to monitor gas transit through the territory of Ukraine is created, Gazprom will definitely provide a possibility for the monitors to work at gas measuring stations in Russia along the Ukrainian border," Gazprom CEO Alexei Miller said.

8 January 2009:

Gazprom today held top-level talks in Brussels with EU leaders in a determined effort to achieve a resolution to the gas transit dispute:

• Gazprom proposed a multilateral protocol that would include producers, purchasers, transporters and independent experts in the monitoring process, as well as the Russian and Ukraine energy ministries, the EU Commission, and Gazprom and Naftogaz Ukrainy.  10 purchaser countries had already signed it, but it was rejected by Ukraine. 

• The EU Commission then produced a far more limited proposal involving just gas experts and EU officials.  Gazprom rejected this as inadequate for monitoring the Ukrainian transit effectively.

Gazprom delegation headed by company CEO Alexei Miller visited Brussels:

• The main issue discussed at the meetings comprised a complex of measures to resume transportation of Russian gas via Ukrainian territory as soon as possible. An agreement in principle has been reached to create a multilateral committee of independent monitors who would work at gas measuring hubs and stations in Ukraine.

• "As soon as international monitors arrive Ukraine will have to immediately resume the transit of Russian gas to Europe," Alexei Miller said.

• "We contacted the companies consuming Russian gas with a proposal about their participation in the work of the international committee of independent monitors. Ten companies agreed. It is proposed that representatives of the Russian and Ukrainian energy ministries and of the European Commission participate in the work of the committee. A corresponding protocol has been signed by Gazprom and has been handed over to the European Commission leadership," Alexei Miller said. 

• However the protocol on the creation of the committee of monitors has not been signed yet by the European Commission and encountered objections from the Ukrainian side.

8 January 2009:

Gazprom Chief Executive Alexei Miller spoke to journalists following a meeting with European Parliament President Pöttering:

• We want an urgent solution to the current situation.

• We have agreed a draft protocol for monitoring the flow of transit gas through Ukraine and this has already been signed by 10 companies from EU member states. This would also involve Energy Ministries from Ukraine and Russia as well as European Commission officials.

• We hope that this protocol, which we consider the right solution for the current dispute, can be signed as soon as possible by all parties, including the European Commission.

• Transit of Russian gas through Ukraine must resume as soon as possible and we urge all parties to resolve this issue today.

• We have agreed with the European partners that once the monitors are deployed and have full access to gas transport facilities in Ukraine and Russia we will resume gas supplies to ensure 100% of European transit. Ukraine should allow full access for these monitors to their facilities. Most important is to resume shipments.

• I met Oleh Dubina in Brussels today, after we had negotiated in Moscow last night as we traveled together to Brussels on the same plane. We will also be returning to Moscow on the same plane. May I remind you that on 31 December it was Naftogaz, who walked out of the negotiations and was absent for eight days because of many reasons including that Ukrainian colleagues had no mandate to negotiate.

• Gazprom, which is a major gas supplier to EU, values its reputation as a reliable supplier and is prepared to supply EU as much gas as it needs. Ukraine currently does not fulfill its obligations as a transit country.

• Under Energy Charter Treaty the affected nations can refer Ukraine to court for failing to fulfil its transit obligations.

• Gazprom has a valid and functioning transit agreement with Ukraine until 2010 December 31

Gazprom CEO Alexei Miller and Deputy Chairman Alexander Medvedev were in Brussels to discuss the status of gas deliveries through Ukraine to Europe with the European Commission and European Parliament representatives:

• Gazprom proposed a multilateral protocol that would include producers, purchasers, transporters and independent experts in the monitoring process, as well as the Russian and Ukraine energy ministries, the EU Commission, and Gazprom and Naftogaz Ukrainy.  10 purchaser countries had already signed it, but it was rejected by Ukraine. 

• The EU Commission then produced a far more limited proposal involving just gas experts and EU officials.  Gazprom rejected this as inadequate for monitoring the Ukrainian transit effectively.

• Miller called for an urgent solution to the problem, reiterated Gazprom’s intention to resume gas supplies as soon as satisfactory conditions for monitoring the flow of transit gas through Ukraine are agreed, and made constructive and detailed proposals to establish a workable multilateral monitoring process. 

In a scheduled meeting in Moscow today Gazprom CEO Mr Miller, Prime Minister Mr Putin and Eni CEO Mr Scaroni, the Russian side proposed an innovative solution to end the current gas transit crisis:

• The proposal calls for major European energy firms to form a consortium of gas importers that would buy the technical gas from OAO Gazprom needed to deliver natural gas via Ukraine to European customers.

• In a telephone call earlier today with Ukraine's President Yuschenko, Russian President Dmitry Medvedev had proposed an innovative solution to enable Gazprom to resume transiting supplies of gas to European customers via Ukraine.  The proposal was then discussed today in a telephone conversation between Prime Minister Putin and Italian Prime Minister Berlusconi.

• Putin said that from Gazprom's side the flow of gas was open, but despite all of its efforts, and all of the requests from European partners Ukraine had continued to refuse Gazprom's daily requests to transit gas to Europe. 

• Ukraine had said it was technically incapable of allowing Russian gas to reach Europe unless it received 1.7bcm of gas for technical purposes, partly to refill the pipeline system and partly to fuel the compressor stations along its network.  Whilst Putin called the request for Gazprom to transfer ownership of this significant and expensive amount of gas to Ukraine absurd, he said that Russia had to help Ukraine.

• Whilst Russia was not able to take all the financial risks of providing this large volume of gas alone, it was proposing to major European partners and customers that they join together to form a consortium which would share the cost and ownership of the technical gas, which would be supplied to Ukraine to enable the resumption of supplies to Europe. 

   

• Ukraine would promise to pay for this gas once a price had been agreed upon.  Until then, the gas would remain the property of the international consortium in the hope that this would guarantee that it would not be illegally taken out of the Ukrainian transit system again.  It is hoped that this solution would prevent any further disruption of supplies of Russian gas to Europe.

• Scaroni called the proposal innovative and constructive, and underlined that this was a commercial rather than a political solution.  

• All other European companies who purchase Russian gas delivered via Ukraine, such as E.on Ruhrgas, will be invited to join such a consortium in the coming hours.  Such a consortium could be put together very rapidly.

• This initiative is the latest in a series of attempts by Gazprom to do whatever it can to make sure that European customers are receiving their gas.

Sergei Kupriyanov described a letter received from Naftogaz Ukrainy:

• Kupriyanov said that the letter indicated that there is a technical possibility to open Sudzhu and begin the transit of gas to European consumers. According to the document Naftogaz Ukrainy is ready to take 99.2 million cubic meters per day through GIS Sudzha, and divide these volumes partly for Moldova (13.9 mcm), partly to Orlovka (28 mcm) and partly in other direction, in particular, to Uzhhorod (57.3 mcm).  

• “This means that, in fact, there was a technical possibility to receive Russian gas into the Ukrainian system this entire time. There is no political decision to reopen the transit of Russian gas to Europe through Ukraine. And, despite receiving information from the dispatcher today that it is possible to take gas into the system, Naftogaz Ukrainy Chief Oleg Dubina in a telephone conversation today stated that they will not do so,” said Kupriyanov.

7 January 2009:

In a conference call with international journalists Gazprom Deputy CEO Alexander Medvedev said:

• Ukraine has now shut down all the major export pipelines going through the country which enable gas to transit to Europe.  The fact that Naftogaz Ukrainy has taken this action was confirmed by Austrian and Slovak operators. At the moment any gas delivered to Ukraine will not reach European customers as the pipeline routes are closed.

• We now ask Ukraine to open the pipelines. If Ukraine does not execute this then there is no point in pumping gas through the country despite all our efforts. We are ready to start pumping as soon as the pipeline is open.

• Gazprom is now attempting to mitigate for this shortfall  to its European customers  from  its European underground storage facilities , by increasing supplies through Yamal-Europe,  Belarus  and Blue Stream  and by buying gas on the spot market.

• These alternative sources of gas do not compensate fully for the Ukraine shortfall. The normal level of exports to Europe in winter is up to 450 million cubic metres of gas per day. Today we have delivered 170 million cubic metres of gas to Europe.

• Gazprom does not currently need to reduce production as it is making use of its extensive underground gas storage facilities within Russia.  It will continue to seek to manage the system to avoid any shut-ins as this would impact on the company's future production profile.

• We still have not been able to have any negotiations with Naftogaz since Dec 31st  but we are and have been ready to negotiate day and night.

• Gazprom has mandated independent observers to verify flows at Russian & Western European stations for some time but Ukraine has so far refused entry to the stations in its territory.

• We had offered Ukraine a fixed price of $250 per 1,000 cubic meters of gas for 2009, which was rejected. If Ukraine was to pay European market prices for gas deliveries at this point it would pay $450 per 1,000 cubic meters (the current European market price.) If Ukraine bought Central Asian gas from us at the Russian-Ukrainian border that price would be $380 per 1,000 cubic meters - both of these prices are based on a pricing formula which takes into account the oil price among other factors and will go down at the end of the second quarter 2009.

Gazprom announced that it has been forced to halt gas deliveries via Ukraine

• Ukraine breached the international law and ignored the existing transit tariff agreement initially by unlawfully withdrawing Russian gas and then by fully closing shipments across its territory to Europe.

• In such unprecedented conditions, when our European consumers do not get the gas anyway, we have to halt supplies to the gas transportation system of Ukraine altogether until Ukraine provides guarantees of its transit to Europe in full volume.  

• At the same time Gazprom is taking all possible measures to fulfill its export commitments. It has increased supplies through the territory of Belarus and the Blue Stream pipeline, and upped the withdrawal of gas from underground storages in Europe, and engaged in spot transactions.

OAO Gazprom Deputy Chief Executive Officer Alexander Medvedev told reporters today that Ukraine had closed the fourth and last pipeline through which transit gas is transported to Europe.

6 January 2009:

Alexander Medvedev Gave a Joint Press Briefing after Meeting with Michael Glos, German Minister of Economics:

• Ukraine blocked three key gas pipelines to Europe last night in a both "unprecedented" and "unilateral" move, said Medvedev.  “Ukraine is responsible for everything that has happened.”

• Ukraine must fulfill its responsibilities as a transit state.”

• “Regrettably, Ukraine has threatened to cut deliveries further.”

• There is “no need” for mediation “because we are professional enough to resolve this commercial problem ourselves.”

• Gazprom would try to use alternative delivery routes to avoid a crisis but "we don't have the option to compensate for the amount of gas that has been stolen." “There’s no physical possibility” of increasing supplies after Ukraine “throttled deliveries to Western Europe to one-quarter of normal.”

• Gazprom is ready to negotiate “day and night” with Ukraine to resolve the dispute. A solution is needed “as urgently as possible.”

• The situation in the Balkans is “especially worrying” and needs urgent measures.

• Michael Glos highlighted that Gazprom has always been a reliable supplier and urged both sides to “urgently return” to talks.

 

 

 

 

 

 

 

 

 

 

 

 

Gazprom Deputy Chief Executive Alexander Medvedev spoke to journalists in London:

• In the early hours of the morning Ukrainians shut down 3 of its export pipelines. This is absolutely unprecedented in the history of the industry.

• As a result the current flow through Ukraine to Europe is currently 7 times less than normal (now 40 mcm is getting through to Gazprom’s customers).

• The situation continues to deteriorate.  Europe is hostage of the irresponsible behavior of a transit company.

• Ukraine is in obvious breach of its obligations as a transit country and is breaching previous agreements with Gazprom.

• RosUkrEnergo has more than 10 bcm in underground storage in Ukraine and we understand that Naftogaz Ukrainy isn’t responding to any RUE requests for them to release that gas.  

• We are doing everything we can to increase supply via alternative routes (Belarus, Blue Stream, European storage) but this can’t entirely compensate.

• Our expert engineers along with our European partners are doing everything to avoid a loss of pressure in the pipelines.

• I have been in touch Andris Piebalgs the EU Energy Commissioner and he informed me that one hour before the shutdown he received a call from the Ukrainian delegation and there was no reference to the shutdown.

• The Ukrainians have brought this to an extreme situation and did not provide any information about their actions. They have behaved irresponsibly by halting the supply of natural gas via Ukraine.

• The Ukrainian delegation left the negotiating table six hours before the deadline. We understand that Mrs Tymoshenko had accepted the proposed terms but this was blocked by Mr Yushchenko.

• After the events of 2006/7 we established an early warning system with our partners, customers and European customers and have been keeping them informed.

• We had offered Ukraine a fixed price of $250 per 1,000 cubic meters of gas for 2009, which was rejected. If Ukraine was to pay European market prices for gas deliveries at this point it would pay $450 per 1,000 cubic meters (the current European market price) – if Ukraine bought Central Asian gas from us at the Russian-Ukrainian border that price would be $380 per 1,000 cubic meters – both these prices are based on a pricing formula which takes into account the oil price among other factors and will go down at the end of the second quarter 2009.

• The current debt level for December is $614m and is rising as contractually fixed late payment penalties are accruing since 1 January 2009.

• We remain willing to negotiate.

• Gazprom wants to comply with the memorandum agreed by Prime Ministers Tymoshenko and Putin, which involves a gradual movement to market prices.

After Alexander Medvedev met Michael Glos, German Minister of Economics, today late afternoon in Berlin they gave a joint press conference.

• Ukraine blocked three key gas pipelines to Europe last night in a both "unprecedented" and "unilateral" move. “Ukraine is responsible for everything that has happened.”

• “Ukraine must fulfill its responsibilities as a transit state.”

• “Regrettably, Ukraine has threatened to cut deliveries further.”

• There is “no need” for mediation “because we are professional enough to resolve this commercial problem ourselves.”

• Gazprom would try to use alternative delivery routes to avoid a crisis but "we don't have the option to compensate for the amount of gas that has been stolen." “There’s no physical possibility” of increasing supplies after Ukraine “throttled deliveries to Western Europe to one-quarter of normal.”

• Gazprom is ready to negotiate “day and night” with Ukraine to resolve the dispute. A solution is needed “as urgently as possible.”

• The situation in the Balkans is “especially worrying” and needs urgent measures.

• Michael Glos highlighted that Gazprom has always been a reliable supplier and urged both sides to “urgently return” to talks.

5 January 2009:

Gazprom Deputy Chief Executive Alexander Medvedev spoke to journalists in Paris:

• Alexander Medvedev stated that Ukraine was stealing 50 million cubic meters of gas and withholding deliveries to Hungary, Poland and Romania. He said that Ukraine was siphoning off gas from the transit pipeline to Europe and from underground storage.

• "The overall volume of... better to say it in black and white -- stolen gas -- is 50 million cubic meters. It's a substantial amount," Medvedev said.

• "We expressed [to European governments] the opinion that the government of the states that are facing a shortage of supplies due to the policy of Ukraine, they should use all legal means ... to force Ukraine to conform to its contractual obligations," he said.

• He also confirmed that Gazprom plans to file a suit in the coming days with a Stockholm arbitration body accusing Ukraine of violating a contract for the transit of gas to Europe.

• Medvedev also noted that Gazprom has delivered gas through alternative routes, using the Yamal-Europe pipeline through Belarus and Poland and by tapping into underground storage tanks, to meet demand from Western Europe. "Our customers currently under our contracts don't feel any non-deliveries. We are doing it in order that our customers will not suffer, but it is not easy in the current circumstances because winter in Europe is getting colder," he said.

4 January 2009:

Gazprom spokesman Sergei Kupriyanov gave an update on the latest developments in the gas dispute with Ukraine:

• Gas supply arrears in the amount $614 million for 2008 have not yet been paid.

• Naftogaz Ukrainy is not taking any steps to resume negotiations in respect to agreeing a gas supply contract for 2009.

• Ukraine is refusing to acknowledge the current transit contract, which is valid until 2010, is flagrantly violating its obligations as a transit country and has not responded positively to any of the compromises proposed by Gazprom to resolve the situation.

• Ukraine is illegally taking gas destined for European customers without permission and without payment.

3 January 2009:

Gazprom Deputy Chairman Alexander Medvedev briefed the media in Prague on the latest developments on the gas dispute:

• Negotiations over the gas contract are unable to resume because there has been no relevant response from the Ukrainian side. Gazprom is ready to fulfill its commitments to the EU and will use all measures to make Ukraine comply with its obligations as a transit country. 

• Ukraine has been siphoning off natural gas from some of Russia's shipments to other countries and also from underground storage, leading to supply reductions in several European countries including Romania, Hungary and Poland.

• Gazprom is using alternative routes, including Belarus, but does not have enough capacity there to bring supplies to normal levels.

Gazprom Deputy Chairman Alexander Medvedev briefed the media in Berlin on the latest developments on the gas dispute:

• Gazprom and Naftogaz had reached an agreement on the next contract including the exclusion of RosUkrEnergo.  Only signatures were missing when Ukraine left the table and talks collapsed with no mandate for the negotiators.

• Since the 1990s, Gazprom has advocated for a long-term contract with Ukraine.  Ukraine has always wanted a 1 year contract.

• Ukraine is stealing gas from export pipelines as well as from RosUkrEnergo's storage.

• Gazprom hopes that Naftogaz will come back to the negotiation table.

• Gazprom will continue to communicate its position to all of its European customers in the coming days. 

Gazprom Management Committee Chairman Alexey Miller made the following statement:

• "Gazprom has taken the decision to file a lawsuit with the Stockholm international arbitration court to force Naftogaz Ukrainy to secure unimpeded transit of Russian gas to Europe across Ukraine. The lawsuit will be filed in accordance with the Contract of June 21, 2002 on the volumes and terms of Russian natural gas transit across Ukraine to European consumers over 2003-2013. As part of this lawsuit Gazprom will ask the court to adopt in the shortest possible time provisional measures prohibiting Naftogaz Ukrainy to take any actions aimed at reducing the Russian gas transit to Europe. I have notified Russian President Dmitry Medvedev about the planned legal action and he has approved this decision. All the necessary documents will be prepared and sent to Stockholm in the nearest future."

Gazprom Implored Ukraine to Return to Negotiations and Desist from Siphoning European Gas:

• “Since 31 December, Ukraine has refused to negotiate with Gazprom, and instead has resorted to siphoning off gas intended for European customers, in full breach of its obligations as a transit country. We implore Ukraine to desist from these illegal actions and to come back to Moscow to negotiate once and for all a mutually acceptable gas supply deal.  Gazprom has taken every possible step to find a workable solution, and to bring and keep both sides at the negotiating table.  We remain willing to meet with them immediately,” said Gazprom Deputy Chairman Alexander Medvedev.

• Ukraine has admitted to siphoning off gas from pipelines and underground storage facilities, in clear violation of a signed transit contract that runs through 2010, as well as its obligations as a signatory to the Energy Charter.  As a result, energy firms in Bulgaria, Poland, Romania and Hungary have noted falls in supply.  Gazprom has increased volumes to the Blue Stream pipeline towards Turkey, as well as to the gas transport system through Belarus to address this situation in the short term.

2 January 2009:

Gazprom spokesman Sergey Kupriyanov briefed the media on the latest developments:

• The Ukrainian side has not agreed to the needed transit volume for the next 24 hours. Gazprom requested Ukraine ship 303 million cubic meters (mcm) to Europe on 3 January but Ukraine has only agreed to ship 296 mcm.

• Kupriyanov stated that Ukraine has illegally siphoned 21 mcm of gas since Thursday.

• Gazprom has increased supplies through its other pipeline route to Europe, Belarus, which normally handles about 20 percent of Russia's gas shipments to European customers.

• As Ukraine does not recognize the validity of its transit contract with Russia, the two sides are agreeing what volumes to ship to European customers on a day-by-day basis.

• Gazprom expects to receive most of the arrears owed by Ukraine by 11 January, though $614 million will still be outstanding.

• The Ukrainian negotiating team remains in Kiev and has not stated when it plans to return to Moscow for further negotiations.

1 January 2009:

Sergey Kupriyanov made the following remarks during an interview today with Ekho Moskvy: 

• In regards to claims that there is no merit to penalties and fines for late payment, the 2008 gas delivery contract contained a clause stating that there would be a 3% penalty for each day payment was delivered late.
• To ensure that European customers are not disrupted, and that there is no illegal siphoning of gas, Gazprom has independent observers monitoring pipeline exit and entrance points. Ukraine is physically refusing to let the observers in and perform their assigned function within Ukraine. 
• In response to remarks from an aide to Ukrainian Prime Minister Tymoshenko that Ukraine hopes to have a signed contract by January 7, Kupriyanov said that Gazprom is here at the negotiating table as soon as Naftogaz Ukrainy is ready.

Sergey Kupriyanov also made the following remarks at a separate briefing on Thursday:

• In regards to an impasse with the Naftogaz delegation, Kupriyanov stated: "The main problem was not that we disagreed on the price of gas but that the Naftogaz delegation did not have a mandate to sign a new contract.”
• Gazprom continues to call for a resumption of negotiations. 
• To ensure an adequate supply of gas for the European market, Kupriyanov stated “Deliveries for export have been increased to 326 million cubic meters per day."

2008

31 December:

Alexei Miller spoke to Vesti-24 late Wednesday:

• "Negotiations with Ukraine have not led to any definite result. The position Ukraine is taking...is not constructive. We hope that in the hours left until the New Year we will be able to reach an agreement. If there is no agreement by 00:00 (2100 GMT) then by 10:00 a.m. on Jan. 1 Russia will have no legal obligation to deliver gas beyond the ... border with Ukraine."

During a press conference today Gazprom Deputy Chairman and Gazprom Export CEO Alexander Medvedev and Gazprom Spokesman Sergey Kupriyanov gave the following comments:

• Naftogaz Ukrainy has recognized the $2bn debt it owes Gazprom and had the money to pay that debt.

• Rosukrenergo has received $1.5bn, which Gazprom is yet to receive

• Gazprom is very concerned about the situation in particular as Naftogaz Ukrainy has announced it may confiscate transit gas to Europe.

• The existing transit contract with Ukraine is valid through to 2010 and which obliges Ukraine to transit at least 110 bcm of gas per year. Gazprom pays Ukraine a fee of $1.60 per 100 km, which is comparable to transit fees paid to other European countries.

• Talks with Naftogaz Ukrainy are to continue and a contract may yet be signed at last minute.

• Gazprom has offered Naftogaz Ukrainy a discounted price for gas deliveries in 2009.

• If there is no contract signed for future gas deliveries, then there is no legal basis for Gazprom to deliver gas to Ukraine.

• The existing contract for gas deliveries to Ukraine ends tomorrow, 1 January 2009, 10am Moscow time.

• Gazprom hopes for the best, but prepares for the worst.

• Gazprom is in constant contact with its European partners.

29 December:

Gazprom Export Head Alexander Medvedev Spoke to Vesti 24 Regarding Gas Debt Negotiations with Naftogaz Ukrainy

• Gazprom Export head Alexander Medvedev told Vesti 24 in an interview that Gazprom still hoped to sign this year a gas supply deal with Ukraine for 2009. "We very much hope that the proposals that we are tirelessly putting forward will be accepted by the Ukrainian side and we will begin the New Year with a new contract which will allow to soothe fears of population in Europe, Ukraine and Russia…Three days remain before the New Year, and of course no one would like the sad events of the past to be repeated. But if we are doing everything required on our side to avoid that, we unfortunately are not seeing the same enthusiasm from the Ukrainian side, although we have not lost hope," Alexander Medvedev told the Vesti TV channel. Medvedev reiterated that Gazprom had taken steps to keep its European partners informed of progress in the gas dispute.

Gazprom CEO Alexei Miller Held Talks with Naftogaz Ukrainy Head Oleg Dubina

• During the talks, Miller noted that market-level gas prices for Ukraine could amount to $418 per 1,000 cubic meters in case the two sides fail to reach an agreement on pricing for next year and Ukraine switches to market-level prices.

Prime Minister Putin Spoke with Ukrainian President Viktor Yushchenko

• Russian Prime Minister Vladimir Putin said he discussed the issue of Ukrainian gas debt with Ukrainian President Viktor Yushchenko during their one-hour long telephone conversation on Monday, but added that the deal has yet to be reached. "I have just spoken to Viktor Andreyevich for an hour. No agreement has been reached," Putin said.

27 December:

Gazprom spokesman Sergey Kupriyanov's commented during an interview with radio station Moscow Echo on 27 December 2008:

• Gazprom spokesman Sergey Kupriyanov said there is a 50-50 chance that Russia will cut off gas supplies to Ukraine on January 1 or find a resolution.

• "We are looking for ways to do it (avoid a supply cut), including prepayment for transit. I hope we will be able to do it (negotiate a settlement) in the remaining days," he said.

• Kupriyanov also said continuing negotiations would be focused on finding ways for Ukraine to pay its debts through other means, such as the transit fees that Russia pays for sending gas across its territory or for Ukraine to return gas it has stockpiled in underground gas storage.

• "In the last days of the year we are trying to find ways other than monetary ones to settle these debts. I hope that in the remaining days we will succeed in doing this," said Kupriyanov.

• In addition, Kupriyanov remarked that Gazprom will fulfill its obligations to Europe but noted that it cannot rule out disruptions to European supplies if Ukraine siphons off transit gas during a crisis.

24 December:

Gazprom spokesman Sergey Kupriyanov’s comments during a video press conference on 24 December, 2008:

• Gazprom spokesman Sergey Kupriyanov said that Ukraine owes $805.8 million for November and $862.3 for December. Additionally, the fines and penalties amount to about $450 million.

• "We got paid for October. We were clearly told today that we will not be paid for November-December,” Kupriyanov said.

• "In the case that we will not have a contract for 2009, we will not supply gas without a contract. We will not be able to carry out supplies until we have a contract,” Kupriyanov said.

• Kupriyanov said that when asked if Ukraine will pay off its debt by the end of the year, Naftogaz Ukrainy head Oleg Dubina said: “No.”

• Kupriyanov said: “The contract stipulates that Ukraine must pay for each month’s supplies no later than the end of the month in which the gas was supplied. It is obvious that these conditions will not be fulfilled.”

• Kupriyanov ruled out Ukrainian President Victor Yushchenko’s proposal to return gas stored in underground storage. "Even IKEA’s return policy is 30 days, and our contract does not have this option. With regard to the possibility of selling this gas to other countries, that is one of the topics that could be discussed.”

• Kupriyanov noted that the Ukrainian side insists on signing a new contract, without paying off its debt to Gazprom. "In principle, we agree to enter the New Year with a new contract. But debts must be paid off before that.”

• Kupriyanov said that there are principle differences between the current situation and what happened in 2005. “We have two separate contracts and the Ukrainian side has grounds to fulfill its obligations. Ukraine is well-prepared for the winter. There is a lot of gas in underground storage, which means that there are technical possibilities to carry out the transit contracts.”

• Kupriyanov said that the assessment of Russia's actions in 2005 was more due to the euphoria caused by the Orange Revolution. "Now the position of our Ukrainian colleagues is more pragmatic. The Ukrainian side has recognized that the debt must be paid."

• Kupriyanov said that Gazprom offered Ukraine to pay for gas transit through its territory at the current rate of $1.7 per thousand cubic meters per one hundred kilometers to help pay off Ukraine’s gas delivery debt. He said that Ukraine proposed an increase for that fee.

• Kupriyanov said that the price of gas to Ukraine in 2009 would be acceptable to consumers. "With regard to prices, it may be perfectly acceptable for Ukrainian consumers," stressing that the problem is not with the price of gas for 2009, but with the current debt. “We will agree on the price, taking into account market conditions and the European price.”

• Kupriyanov said that Gazprom has not yet started the technical preparations to shut off gas to Ukraine but hour X is 1 January.

• Kupriyanov said: “We will deliver the full volume of gas destined for transit and we will fulfill all our obligations towards European consumers.”

Russian President Dmitry Medvedev spoke to Russian television channels in an end-of-the-year interview on 24 December, 2008:

• President Medvedev urged Ukrainian authorities to fully repay the debt for Russian gas. "The money must be paid to the last ruble, if they do not want their economy to be hit with demands and sanctions from the Russian Federation. We can not continue like this," - Medvedev. He noted that the extra gas supplied to Ukraine "once again demonstrates the ineffectiveness of the efforts of the Ukrainian authorities…Instead of amassing debt and then failing to pay for it, it would have been better to focus all forces on repaying the debt, they should’ve found some sort of an effective method. No, they are trying to invent something, they take conflicting positions. Sometimes it is just embarrassing to watch all this.” He expressed hope that Ukrainian politicians will take the necessary decisions in order to meet the debts. "You know, we do not have the goal of shutting of the gas. Our goal is to get the money. But if Ukraine does not pay, we will use the whole arsenal of possibilities, this is very clear, there should be no illusions about this, in ensuring that we fulfill our obligations to customers in other countries, including in Europe.”

24 December:

• Secretary General of the Energy Charter Secretariat issued a statement underlining the importance of Ukraine respecting its gas transit obligations as set out in the Energy Charter Treaty in Article 7(5).The Secretary General said that, "Present negotiations on the settlement of outstanding payment for Russian gas sold to Ukraine have not yet been resolved. The dispute relates to a supply contract and is a commercial matter."

18 December:

• Gazprom Deputy CEO Alexander Medvedev told a news conference in Moscow that Gazprom has offered Ukraine several options to settle the gas debt issue, taking into consideration the complicated economic situation in the country.  He said: “Unfortunately, none of the offered schemes were accepted to further settle the issue.”

• Alexander Medvedev also told the news conference Gazprom would be unable to switch to direct gas deals with Ukraine without the use of intermediaries in the current situation.

• Gazprom spokesman Sergey Kupriyanov told the news conference in Moscow that Gazprom had received $800 million from Ukraine, but said it was notified by Naftogaz Ukrainy that it won't receive payments for November and December before 2009.  “Thus we would have no legal grounds to supply gas starting January 1 and we won’t be able to turn to direct contracts with Ukraine until the debt is paid off,” Kupriyanov said.

• Kupriyanov also told the news conference that Gazprom would write to its European customers Thursday warning them of possible problems with gas deliveries transiting Ukraine.

• Ukrainian President Viktor Yushchenko’s top official for energy, Bogdan Sokolovsky, said in a statement that, "Efforts are being undertaken to ensure the timely payment of bills for November and December.  Today the president's actions aim to settle the problems provoked by the systemic mistakes and inaction of the head of government.”

17 December:

• Gazprom said that the latest round of debt talks with Ukraine failed to yield “noticeable progress” and that negotiations will continue.

12 December:

• Alexander Medvedev told reporters in Paris that Gazprom has offered Ukraine a compromise deal on its gas debt.  "We hope to find a solution. We are making proposals to our Ukrainian colleagues," he said.

10 December:

• A spokesman for the European Energy Commissioner Andris Piebalgs, Ferran Tarradellas Espuny, said that the commissioner told Gazprom to continue supplying gas to the EU through Ukraine.  "The commission, we said, doesn't want to see any impact on supplies of gas to the E.U. transferring through Ukraine. The commissioner encourages those parties to reach a definitive solution to this problem."

• Gazprom spokesman Sergey Kupriyanov told the Financial Times that the Soviet-built transit pipes that carry most of its gas to Europe could suffer breakdowns this winter because of chronic neglect by Ukraine.  “The situation is worsening every year and we are quite concerned...because some problems might arise because there is higher pressure on the network in this (winter) period,” he said.

• Gazprom spokesman Sergey Kupriyanov said on a visit to Austria, "We understand that Ukraine is having economic problems but this is not a reason not to pay for the gas."

9 December:

• Gazprom CEO Alexei Miller said that Gazprom will continue talks with Ukraine on December 12 after failing to reach an agreement on debt repayments. “The debt issue is still open, as is the issue of signing a contract for 2009 gas deliveries,” Miller said on Vesti-24 after meeting with Naftogaz Ukrainy head Oleg Dubina.

• Naftogaz Ukrainy head Oleg Dubina said that the company is in talks with the IMF and a number of banks on raising the cash to repay Gazprom. "I think the main problem that we have now is that we owe Gazprom for the consumed gas," he said, adding that Naftogaz Ukrainy would like to see a direct contract with Gazprom on gas supplies to Ukraine next year.

• A spokesman for European Energy Commissioner Andris Piebalgs said that the Commissioner calls on Russia and Ukraine to solve the gas dispute. "The Commissioner calls on both parties to reach a definitive agreement that solves their bilateral problems once and for all as soon as possible," he said. "Piebalgs has intensified contacts with Russian and Ukrainian authorities...Commission officials are going to meet representatives of Gazprom...EU delegations in Moscow and Kiev are also in intense negotiations," the spokesman added.

8 December:

Alexander Medvedev’s Financial Times Interview:

• Alexander Medvedev told the Financial Times that talks with Ukraine were “far away from a settlement,” and suggested the country should not be allowed to “steal the gas.” He also said that Gazprom has been making every effort to avoid cutting off Ukraine’s gas, including allowing some of the payments to be deferred. He said talks were continuing and he hoped to reach an agreement before the end of the year.

4 December:

Prime Minister Vladimir Putin’s Annual Televised Question and Answer Session

• “We are proceeding from the assumption that we won't have any problems with transit of gas to Western Europe. But if our partners don't fulfill the agreements or try to siphon gas from the transit pipelines as they did in past years, we will be forced to reduce supplies. What else can we do?” said Prime Minister Vladimir Putin.

3 December:

• Ukrainian Fuel and Energy Minister Yuriy Prodan said that Ukraine hopes to sign a contract for 2009 natural gas deliveries from Russia by the end of the year. “Talks are continuing today on debt for Russian gas already supplied. We did not pay the arrears by Dec. 2, but now I think we will reach an agreement…Talks are proceeding on resolving this issue, finding sources (to settle debts) and to secure rescheduling of payment. A contract must still be signed by the New Year,” he said on the sidelines of a cabinet meeting.

2 December:

• Contrary to the November 25th agreement that Ukraine would clear its entire debt for gas delivered in September and partially for gas delivered in October, Nagtogaz Ukrainy only paid a part of its September debt and none of the agreed October installment. 

• Gazprom said talks on Ukraine’s debt for natural gas will continue on 3 Dec. after Ukraine failed to meet the 1 Dec. repayment deadline. “Today we had a tough round of talks with our Ukrainian colleagues. Ukraine has asked for an additional extension. Talks will continue tomorrow,” Gazprom spokesman Sergei Kupriyanov told Vesti-24.

• A RosUkrEnergo spokesman said: “As of Tuesday evening, RosUkrEnergo received a total of $268.7 million from Naftogaz Ukrainy to settle the debt for supplies in September 2008."

1 December:

• Gazprom spokesman Sergei Kupriyanov said that Naftogaz Ukrainy had made its first payments to Gazprom. "Indeed, we already see the first payments, but so far it is not the entire sum we had agreed on. We expect that by Monday December 1 we will get the payments for supplies in September and partially for October, as was agreed," he said.

28 November:

• Bohdan Sokolovskyi, an aide to President Yushchenko, said that Ukraine guarantees the stable transit of gas to Europe regardless of how its relationship with Gazprom develops. “Ukraine is able to fulfill its obligations on gas supply to foreign markets as well as on the domestic market,” he said.

26 November:

Sergei Kupriyanov’s Teleconference

• Gazprom spokesman Sergei Kupriyanov said during a teleconference briefing that Gazprom is trying to avoid having to shut off gas to Ukraine. “We will take into account all the lessons of that situation [2006] and make every effort possible to prevent events developing along that scenario," he said.

• Gazprom will resume talks with Ukraine on the price of natural gas if Ukraine should begin repaying debts. Gazprom spokesman Sergei Kupriyanov said that talks could start if Ukraine meets a Dec. 1 deadline to pay a debt of at least $430 million for gas purchased in September. He said that a discrepancy in how much Ukraine owes Gazprom arose because Naftogaz Ukrainy didn’t count penalties and fines for late payment.

• Gazprom spokesman Sergei Kupriyanov said that Ukraine and Russia could stick to an agreement for a three-year transition to world market prices only if outstanding bills were settled now.

• Naftogaz Ukrainy head Oleg Dubina said that Naftogaz Ukrainy will be able to pay its debt once it acquires dollars, which it was unable to buy because of rising demand for the dollar. "At the moment it is impossible to buy foreign currency in Ukraine. Yesterday we threw about (the equivalent of) $600 million at the market and didn't buy any dollars.”

• "I am pleased we have an understanding with Gazprom. We agreed that by Dec. 1 we will settle our debt for September and after Dec. 1 we will meet and examine the situation and how we will resolve it," Naftogaz Ukrainy head Oleg Dubina said.

25 November:

Gazprom's Statement Following a Meeting Between Oleg Dubina and Alexei Miller

• Gazprom said in a statement following the meeting between Gazprom CEO Alexei Miller and Naftogaz Ukrainy head Oleg Dubina that Ukraine agreed to pay its debt to Russia by December 1 for gas supplied in September and part of October but it must settle its debt in full before a long-term supply contract can be signed.

• "There have been various announcements on this matter. We are in direct contact with Naftogaz Ukrainy’s senior management and we have a wholly united view on who owes whom and how much," Gazprom spokesman Sergei Kupriyanov told TV channel Vesti 24 after the meeting.

24 November:

Prime Minister Yulia Tymoshenko Orders a Naftogaz Ukrainy Delegation to Moscow for Gas Debt Negotiations with Gazprom

• Prime Minister Yulia Tymoshenko insisted that “Ukraine is a reliable partner and transit will be carried out.” She was "certain that by the end of the year all these issues will be settled.”

• Naftogaz Ukrainy Head Oleg Dubina said in a meeting with Prime Minister Yulia Tymoshenko that Naftogaz Ukrainy "will honor its debt to Gazprom. We will go to Moscow to find ways to solve this problem. I think that these questions will be resolved.”

• Ukrainian presidential spokeswoman Iryna Vannikova said that President Viktor Yuschenko wanted more forthright action from the Ukrainian government. "The issue of setting a gas price is of critical importance now. In this context, the president would like to see a more active position from the government in talks with the Russian side,” Vannikova said in a statement.

• Prime Minister Yulia Tymoshenko told journalists in Kiev that Ukraine owes money for gas put into storage in October and a delay of a few months would help the countries find a solution to payment issues.

23 November:

• Gazprom CEO Alexei Miller said that supplies to Western Europe are secure despite the current conflict with Ukraine. He said that Ukraine gave guarantees that transit pipelines to the west would remain unaffected if Gazprom cuts supply to Ukrainians.

22 November:

• Gazprom spokesman Sergei Kupriyanov said in an interview with Vesti 24 that Gazprom would like to avoid supply cuts to Ukraine in 2009 but will not continue deliveries without a new contract. Kupriyanov said that the Ukrainian side counted only Sept-Oct debt while Gazprom included November debt as well as penalties, and noted that there were no major differences in the overall debt estimates. "Everybody understands pretty well who owes what to whom and how much," Kupriyanov said. He said direct supplies as well as lower gas prices for Ukraine in 2009 were only possible if other conditions set out in the memorandum signed in October by Prime Ministers Putin and Tymoshenko, such as debt redemption in full, were met. He said Russia would not discount for the global crisis. "If Ukraine's consumption drops, our deliveries will fall as well but it is not happening. Gas is burning in furnaces of Ukraine's economy as it had been before, therefore the crisis has nothing to do with it," Kupriyanov said.

21 November:

Ukrainian President Viktor Yushchenko Gives his Government Five Days to Settle Gas Debt

• President Viktor Yushchenko told Ukraine's government to settle debts for gas supplies from Russia in five days and to agree on a price for 2009 imports. "It is your personal responsibility that a state monopoly over which the government exercises direct control has arrears of more than $2 billion. A few days ago you said that everything was settled with gas. You must therefore prove in five days that you have resolved everything, starting with bills for gas supplied,” he told a meeting of the National Security and Defence Council.

• Prime Minister Yulia Tymoshenko, on a visit to Sweden, told Ukrainian media that a deal would soon be signed with Russia settling any debts and setting down a gradual rise in prices. She said: "We need to be patient and wait for the signing of an agreement, where I believe the price will be that was set down in the memorandum I signed with Vladimir Putin, where it is stressed that we will move gradually towards market prices." Such a deal, she said, would also cover debts.

• Naftogaz Ukrainy said it doesn’t owe Gazprom any money. “The company underlines that it doesn’t have any debt to Gazprom. The company owes $1.267 billion to RosUkrEnergo, which is the sole importer of gas to the former Soviet state,” Naftogaz Ukrainy said in an e-mailed statement. According to the statement, Naftogaz Ukrainy is doing “everything possible to repay the debt as soon as possible.”

• Marc Franco, the EU’s envoy to Russia, said that the EU is "pretty confident" that Russia and Ukraine will resolve their gas dispute. "We have expressed... our confidence that they will find a solution and that the gas supply to the European Union will not be disrupted," Franco said.  

20 November:

President Medvedev Orders Gazprom to Recover Gas Debt from Ukraine

• President Dmitry Medvedev ordered Gazprom to ask Ukraine to pay back its gas debt to Russia during the meeting with Gazprom CEO Alexei Miller. "We need to fully clarify ourselves with Ukraine's debt and recover it on a goodwill or compulsory basis. Because it is stated in the current legislation and within the frames of our bilateral relationships," President Medvedev told Miller.

• Naftogaz Ukrainy disputes amount of dept owed. Vladimir Trikolich told reporters.that Natftogaz Ukrainy’s debt to RosUkrEnergo does not exceed $1.3 billion: "Today our debt with all of the nuances taken into account is $1.26-$1.27 billion... We are buying all the gas from RosUkrEnergo, so we do not have any debts to Gazprom."

19 November:

• Gazprom told Kommersant Ukrainy that as a possible compromise, the company is seeking free gas transit through Ukraine in exchange for annulling Ukraine’s $2.4 billion debt for imports of gas. Gazprom has also asked Ukraine to freeze transit fees at $1.70 for 1,000 cubic meters of gas over 100 kilometers (62 miles) until 2011.

14 November:

• Prime Minister Yulia Tymoshenko said that Ukraine hopes to sign an agreement on natural gas supplies from Russia with Gazprom this month. The two countries are “finding understanding” on the issue and an agreement this month “would be very good,” Tymoshenko said at a meeting of the Commonwealth of Independent States in Moldova.

• Talks between Gazprom and Naftogaz Ukrainy have been ”positive,” Prime Minister Vladimir Putin said in remarks broadcast by Ukrainian television. “Of course, there are many difficulties, but I, just like you, hope that mutually acceptable agreements will be reached at the corporate level,'' he said.

10 November:

• Prime Minister Yulia Tymoshenko said that her government was working on a gas supply agreement with Russia that would keep the price at the 2008 level. "We are at the moment working to retain the 2009 gas price as it is today. We are working on this, but an agreement has not yet been signed," she told metal industry business executives.

28 October:

• Gazprom said that it will continue price talks with Ukraine after Prime Ministers Vladimir Putin and Yulia Tymoshenko signed a MOU on 2 Oct. Gazprom's board ordered management to continue working toward a new model of relations with Ukraine, including a “gradual” price increase.

3 October:

• Prime Minister Yulia Tymoshenko said that RosUkrEnergo owes Gazprom $2.2 billion. She proposed to settle the debt by dipping into gas reserves. "RosUkrEnergo has $2.2 billion in debts to Gazprom, which has no connection to neither Naftogaz Ukrainy or any other state firms. This is commercial debt," she told a news conference.

2 October: 

Prime Ministers Vladimir Putin and Yulia Tymoshenko Sign a Memorandum of Understanding on Direct, Long-term Contract and Gradual Price Increase.

• The agreement allowed for direct long-term relations between Gazprom and Naftogaz Ukrainy as of 1 January 2009.  RosUkrEnergo would disappear as an intermediary and Gazprom would start delivering gas directly to the Ukrainian border. 

• This agreement also set up a step-by-step, three-year period for Ukraine’s transition to purchases of Russian natural gas to market prices on the condition that Ukraine repay its existing debts for previously delivered gas. 

• Ukrainian Prime Minister Yulia Tymoshenko said: "The parties confirmed their willingness to establish a gradual transition to market prices within three years."

• Russian Prime Minister Vladimir Putin told Prime Minister Yulia Tymoshenko that the two countries should resolve energy issues before winter, because the Central Asian nations that supply Russian pipelines have raised prices.

1 May

• Gazprom is allowed to deliver 7.5 bcm gas per year directly to industrian end-users in Ukraine through the local Gazprom subsidiary Gazprom sbyt Ukraina Ltd.

March:

• An agreement is signed stipulating that Ukraine receives at least 55 billion cubic meters of gas from Central Asia at a price of USD 179.5 per 1,000 cubic meters in 2008.

• The supplier of the gas, RosUkrEnergo, is an operator responsible for the delivery of purchased gas.  The buyer at the Ukrainian border is Naftogaz Ukrainy.