After a long meeting in Moscow on the same day, Russian President Vladimir Putin and his Ukrainian counterpart Viktor Yushchenko announced that Russia will continue supplying gas to Ukraine but will follow a different pattern.
After the end of the meeting, the sides specified that starting on February 14 Ukraine will start paying off the debt for Russian gas supplies that has accumulated since last November, and that they will establish a working group to elaborate a new pattern of Russian gas supplies to Ukraine.
It is difficult to explain the reasons behind the latest gas crisis and periodic tensions between the two countries in this sphere since 2006 without describing the old pattern of gas supplies.
The Swiss trader Rosukrenergo (the Russian gas monopoly Gazprom on the one hand and two Ukrainian businessmen Dmitry Firtash and Ivan Fursin on the other share its stock fifty-fifty) was the monopoly supplier of gas from Russia to Ukraine.
Since 2007, the company supplied Ukraine exclusively with Central Asian gas. It received it from Gazprom and resold it at the Ukrainian border to its Ukrainian subsidiary, Ukrgazenergo (50% of its stock belongs to Rosukrenergo and 50% to Naftogaz of Ukraine, the country's largest state-controlled oil and gas company). Naftogaz is the main buyer of gas from Ukrgazenergo.
Under the 2007 agreements, in 2008 Ukraine was supposed to receive Central Asian gas under this system at the price of $179.50 per 1,000 cubic meters. But Yulia Tymoshenko, who became Ukrainian prime minister at the end of 2007, announced her decision to bypass the middlemen in gas transactions with Russia. The political and economic interests of Tymoshenko and her entourage played no small role in this respect. A pattern of gas supplies via Rosukrenergo was developed and supported by her predecessors - Yury Yekhanurov and Viktor Yanukovych. Tymoshenko has a different ideology and different economic interests.
Close to Tymoshenko, the current managers of Naftogaz bluntly said that they want to buy gas directly from Gazprom in order to return to the leading positions in the Ukrainian gas market. They were also prepared to receive gas through a new Russian-Ukrainian joint venture, where it would share the stock with Gazprom fifty-fifty; Rosukrenergo and Ukrgazenergo with their mysterious owners Firtash and Fursin were supposed to be ousted from the gas market.
Under the circumstances, Tymoshenko's rise to power created a mess in the chain of supplies involving Rosukrenergo, Ukrgazenergo and Naftogaz. Since last November, Naftogaz has stopped signing contracts on gas supplies from Ukrgazenergo, but is still receiving the fuel. Initially, Naftogaz explained that it wanted to pay for gas but intended to buy gas from now on at the lower price of $179.50 per 1,000 cubic meters from Rosukrenergo rather than from Ukrgazenergo that charged $185 for the same amount.
On February 10, Ukrainian First Deputy Prime Minister Alexander Turchinov put the cards on the table - Naftogaz should sign a new contract directly with Gazprom. Ukraine was ready to pay for the received gas but not to the middlemen.
Gazprom did not even want to hear about the departure of its subsidiaries from the Ukrainian market. The Russian gas monopoly argued that since the start of this year, Rosukrenergo supplied Ukraine with Russian gas at a price of $314.70 per 1,000 cubic meters, because Central Asian gas supplies were reduced due to abnormal frosts. Gazprom estimated Ukraine's total debt since last year at $1.5 billion. This is why it presented Ukraine with an ultimatum and threatened to stop supplies on February 12.
The talks between the Russian and Ukrainian companies ended in a deadlock. As they admitted themselves, only a political move could save the situation. This is what happened. After the summit, Gazprom and Naftogaz representatives announced that Rosukrenergo and Ukrgazenergo would be replaced by two new joint ventures.
Rosukrenergo's role (the purchase and resale of Central Asian gas) will be played by a new joint venture where Gazprom and Naftogaz will receive equal shares. Tymoshenko's dream of getting rid of the middlemen has come true, although it was hard to predict her victory just several days ago. Instead of Ukrgazenergo, Naftogaz and Gazprom will also establish a joint venture with equal shares to purchase gas for Ukraine and sell it on the domestic market. The decision to set up a second joint venture benefits Gazprom by consolidating its positions in Ukraine.
Like the two sides agreed at the end of last year, Russia will sell gas to Ukraine for $179.50 per 1,000 cubic meters. The results of the presidential meeting should satisfy both sides. The only losers are Firtash and Fursin who have been kicked out of the very lucrative business of reselling Central Asian gas to Ukraine.
On February 14, Ukraine will start paying off its debt for the received gas. It seems likely that the sides will argue about what sums should be paid.
The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.
