Saturday, February 04, 2006

Gas Deal: Doubts and Questions

RFE/RL's Newsline (February 3) on the apparently imminent Russia-Ukraine gas deal:

KYIV CLAIMS TO HAVE SECURED GAS PRICE FOR FIVE YEARS... Naftohaz Ukrayiny and the Swiss-based RosUkrEnergo on 2 February signed an accord on creating a joint venture to sell gas in Ukraine, as they were obliged to do under a framework agreement concluded between them and Gazprom on 4 January (see "RFE/RL Belarus, Ukraine, and Moldova Report," 10 January 2006), Interfax-Ukraine reported. The joint venture, named UkrGazEnergo, has a charter capital of 5 million hryvnyas ($1 million) with stakes shared evenly between its founders. Naftohaz Ukrayiny spokesman Eduard Zanyuk told journalists in Kyiv that neither gas-storage facilities nor gas pipelines in Ukraine will be included in UkrGazEnergo's charter fund. He also revealed that RosUkrEnergo and UkrGazEnergo signed a five-year contract on gas supplies to Ukraine. Under the contract Ukraine is to receive 34 billion cubic meters of gas in 2006 and some 60 billion cubic meters annually in 2007-10. "The gas price defined in this contract is fixed for five years and is $95 for 1,000 cubic meters," Zanyuk noted. RosUkrEnergo's managers, Konstantin Chuichenko and Oleg Palchikov, who attended the news conference along with Zanyuk, refused to answer questions from journalists and reportedly left the conference room to continue talks with Naftohaz Ukrayiny. JM

...BUT GAS TRADER CASTS SOME DOUBT. RosUkrEnergo executive director Konstantin Chuichenko told Interfax-Ukraine in Kyiv on 2 February that his company may revise the price of gas supplies to Ukraine under the contract it signed with UkrGazEnergo earlier the same day. "The price may be changed -- it depends on the price of Russian gas for RosUkrEnergo," Chuichenko said. "There is a procedure [for changing the price] written down in the contract, and it is a typical procedure in international contacts of such a type," he added. Another RosUkrEnergo manager, Ivan Palchikov, told Interfax-Ukraine that there is no "price formula" in the gas contract signed with UkrGazEnergo. According to Palchikov, the effective gas price for Ukraine will depend on the price of Central Asian gas in the total gas volume supplied to the country. Meanwhile, Andriy Halushchak from the UkrGazEnergo supervisory board, told Interfax-Ukraine that the contract includes no "mean tricks" regarding the gas price. "If one side wants to change the price, it proposes to conclude a relevant agreement to the other side. If both sides cannot agree on this, they resort to court," Halushchak explained. JM
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