Alexei Miller on the creation of 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.

Below is a statement released by Gazprom following talks in Brussels on the creation of a monitoring system for gas transit.

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 Statement on Multilateral Transit Monitoring

Gazprom today held top-level talks in Brussels with EU leaders in a determined effort to achieve a resolution to the gas transit dispute.  Alexei Miller, CEO of Gazprom, and Alexander Medvedev, Director-General of Gazprom Export, met EU Commission President João Manuel Barroso, European Parliament President Hans-Gert Poettering, and EU Energy Commissioner Andris Piebalgs.  

Mr 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. 

Gazprom appreciates the efforts made today by the EU Commission to help broker an agreement on the multilateral monitoring question,  but regrets that as yet no agreement has been reached. 

Gazprom believes that only a comprehensive and genuinely multilateral monitoring team will guarantee the full, fair and effective scrutiny of the transit process, thus preventing misinterpretation and accusations in the future.  Monitors should be selected from all stakeholders, including EU recipient countries, the EU Commission, the Ukrainian and Russian authorities, and independent experts, as well as representatives from Naftogaz Ukrainy and Gazprom themselves.  Anything less risks producing a partial and inaccurate picture of gas transit volumes. 

Gazprom will keep pressing for a resolution of the crisis, and will continue the search for an agreement with its Ukrainian counterpart.

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 travelled 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

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.