Ukraine energy crisis

[Serb]

Originally posted by PLATO
Ukraine looks to have won what they started out to accomplish.

Not true.

They had been negotiating for a phased increase to market prices to avoid an economic shock.

Sorry, but I can't see this phased increase Ukraine has been asking for in the new agreement . The basis price now is 230USD. And further price of gas for Ukraine will be based upon "European formula" Gazprom using for other European countries for years. That's not what Ukraine was looking for, but what Gazprom wanted.

It seems that Gazprom and their masters in the Kremlin decided that it really wasn't in their interest to cause an economic disaster on their boarder.

True, Putin decided to do not finish-off the Ukraine. It's good.

Gazprom and Moscow seem also to have achieved their goal in emphasising that Market conditions should be the determinor of price.

True.

Europe wins by being put on notice that both Ukraine and Russia are critical to its Energy needs. This should cause policies that will work to secure these energy supplies and foster closer relations with both Russia abd Ukraine.

Don't know how about Ukraine, actually. According to the new agreement, Russian gas shipments to EU are no longer a hostage of Ukraine.

While Russia has tremendous gas reserves, Ukraines arenot shabby. Hopefully, as the price rises to market levels for its gas, the Ukraine will begin to develop its own gas infrastructure and begin to compete as an exporter.

Bah, according the new contract Ukraine can no longer re-export Russian gas, except the gas which appointed for a joint Gazprom-Naftogas export programms, thus Ukraine lost it's position as re-exporter of the Russian gas.

Nice solution for all.

Yes, except it's a clear defeat for Ukraine.

[Serb]

Not that I expect many of you can read Russian, but at least we have one respected orbiter here (I hope so).
So, I post these copies of original documents signed between Ukraine and Russia for Saras and other Russian speakers:

[Serb]

page2:

[Serb]

My summary:
Before the agreement, Ukraine despite it has a ridiculous 50 USD per 1000m3 price for a gas delivered to Ukraine, had 1/6, once again - 1/6 of all Russian gas transited to EU through its territory, no matter how much this gas cost in Europe. Before the agreement it was a pure barter. Now, we pay in hard currency for a transit through Ukraine 1.6USD for 1000m3 for 100 km. AND UKRAINE PAYS US THE SAME 1.6USD per 1000m3 for 100km for transit of its gas through Russian territory. So Gazprom got what it wanted - the price for transit and gas price for Ukraine itself is separated now. Prior the agreement Ukraine had 4.22$ as transit fee for every 1000m3 of Russian gas that went through its territory, because it had its transit fee for of gas which cost for it 50$, not 240$ as in Europe. So, regardles how much this gas cost in EU they got its 1/6 share of transited gas not a fixed amount of money. Now it has only 1.6$ per 1000m3 and have to pay the same fee for a transit through Russian territory (just, compare the routes for Russia through Ukraine to EU and the route from Turkmenistan to Ukraine through Russia. It’s a great victory for Yushenko, no doubt).
So, Ukraine lose, this year according to:
a) Reuter: “Based on a rough calculation, the gas deal could cost Ukraine an extra $2.9 billion this year”.
And those experts did not take into account transit losses and inderect losses for Ukraine caused by reduction of competitive ability of Ukranian Chemical and Stell industries (its main exporters)
b) Former PM of Ukraine Yulia Timoshenko (yeah, this so-called “hot” biatch) now Ukraine loses 4.5 billion USD a year.
Ukraine gains this year – nothing.
Gazprom lose this year – nothing.
Gazprom gains this year:
It’s loses for trasportation of gas through Ukraine reduced over three times. Previosly Gazprom lose 17-18 blns m3 of gas as payment for transit, now it loses only 6 bln m3. Net profit is 12 bln m3 = 12blnm3*230$=2.76bln USD a year MINIMUM (because the gas price most certainly will be growing). That’s what Gazprom gains only as resoult of new payment scheme for transit of its gas, not to mention its gains because of increased price from 50USD to 230USD for Russian gas.

After the deal Gazprom’s ADR increased 4.6% and its capitalisation increased 7bln USD. Not to mention inderectly Russia won some serious bucks due to oil price growth because of this crisis.

[Serb]

Now a couple of words about the deal itself.
Previously Ukraine imported bulk of its gas from Middle Asia (Turkmenistan (the dear leader of all Turkmens is the dearest of Yushenko’friends, nice isn’t it?), Uzbekistan (hm, Karimov, another, bad, bad boy according to the American vision of the world) and Kazakhstan (Nazyrbaed is not among the few enlightened democratic leaders of this planet according to your media, isn’t he?) Strange friends this pro-western, pro-liberal, democrat Yushenko pupet of yours have? No? Nevermind.
So. The price Ukraine paid for this gas was/is extremely low
(avg, price =44USD per 1000m3), but your beloved ornage democracy was unable to pay even this price, and they paid only half in hard curency and the rest via barter (pipes, trains, new year trees and galoshes – I’m not joking here, that’s what they realy paid for an Asian gas with). So, the real price for the gas, considering an uncompetitive nature of such Ukranian goods as rubbers, was even lower, something like 30-35USD per 1000m3.
Ukranian gas balance for the next year assumes such structure of gas import:
(notice, bmc=billion cubic meters)
41bcm from Turkmenia + 7bcm from Uzbekistan+8bcm from Kazakhstan + 17 bcm from Russia = 73 bcm
My own rough calculations:
Prior to the new agreement, Ukranian expences for gas import should have been:
(41+7+8)*44 + 17*50= 56*40 + 17*50 = 2.240+ 0.850 = 3.09 billion USD.
After the agreement ALL UKRANIAN GAS IMPORT GOES THROUGH “RosUkrEnergo” Company (once again – THEIR ENTIRE IMPORT NOW CONTROLED BY THIS SINGLE COMPANY, 50% of this enterprise belongs to Gazprom, another half belongs to Austrian bank which soon sell its share to Ukranian Company Naftogaz, at least I heard so) and according to the new agreement Gazprom will sell its gas to “RosUkrEnergo” for 230USD and Ukraine will buy ALL, once again ALL gas from “RosUkrEnergo” for 95USD.
So, after this agreement, Ukranian expences for gas import will be:
(41+7+8+17)*95 = 6.650 billion USD.
Direct Ukranian loses = 6.650 - 3.09 = 3.560 billion USD in 2006 and even more later.
RosUkrEnergo’s profit from price increse is:
((41+7+8)*95) - ((41+7+8)*44) = 2.856 bln$.
This is a “RosUkrEnergo’s” profit for re-export of Middle Asian gas to Ukraine (bought for 44$, sold for 95$).
The Gazprom’s share of this profit is 50% = 2.856/2= 1.428 billion USD.
The Gazprom’s losses for re-selling of Russian gas to Ukraine:
((17*230) - (17*95))/2=2.295/2=1.1475 Billion USD.
Gazprom’s net profit = 1.428 – 1.1475= 0.2805 billion USD.
So, Gazprom’s gains from re-export of Middle Asian gas to Ukraine (95-44$) completely cover-up its losses for re-selling of Russian gas to Ukraine (230-95$)
THUS, THE REAL PRICE OF RUSSIAN GAS FOR UKRAINE IS EVEN A BIT MORE THAN 230 USD per 1000m3!!!
And it’s a brilliant victory for Putin, Gazprom and Russia.

(Notice, it’s true if the price of gas going to Ukraine from Middle Asia is/will be 44$ per 1000m3. That’s why I believe this is not over yet. I bet after a several months we will have another thread dedicated to Russian-Ukranian gas relationships. But this round has been clearly won by Putin. Hands down).

[lord of the mark]

Originally posted by Serb
Now a couple of words about the deal itself.
Previously Ukraine imported bulk of its gas from Middle Asia (Turkmenistan (the dear leader of all Turkmens is the dearest of Yushenko’friends, nice isn’t it?), Uzbekistan (hm, Karimov, another, bad, bad boy according to the American vision of the world) and Kazakhstan (Nazyrbaed is not among the few enlightened democratic leaders of this planet according to your media, isn’t he?) Strange friends this pro-western, pro-liberal, democrat Yushenko pupet of yours have? No? Nevermind.

The right wing imperialist US imports lots of oil from Chavez' Venezuala. Enough said.


By the way, are you saying Karimov isnt a bad boy? Are you defending Karimov and Turkmenbashi? As for Kazhakstan, our media hasnt been particularly hard on Nazyrbaev.

[DanS]

Further, we imported oil from Iraq up until a month or two before the invasion.

[Saras]

Germany was Frances largest trading partner in 1938.

[VetLegion]

Before this crisis I wasn't aware just how big a subsidy Ukraine and Byelorussia were getting from Russia. This puts a new light on Lukasenko's "economic miracle", as well as steel tariffs we've bashed the US (Bush) and EU for. In fact Ukrainians were able to dump the price of Steel, and in that light Bush's tariffs from few years ago seem much more fair.

[VetLegion]

Now we need to investigate the size of Russian subsidy to Canadian lumber industry. Yep, everything is revealed in the end.

[Spiffor]

[Serb]

Who said it was a victory for Ukraine? Tell this to Ukranian parliament which fired the Government of Yekhanurov over this deal.

Ukraine MPs vote to sack cabinet over gas deal with Russia

Tom Parfitt in Moscow
Wednesday January 11, 2006
The Guardian


Opposition MPs in Ukraine issued a rebuke to President Viktor Yushchenko yesterday by voting to sack his cabinet over last week's deal to end the "gas war" with Russia.
A no-confidence motion was backed by 250 votes to 50 to dismiss the prime minister, Yury Yekhanurov, and his cabinet and reappoint them as acting ministers until elections in March. A third of members boycotted the vote.

Many MPs had reacted furiously to the deal with Moscow, under which control of Ukraine's gas imports was handed to a shadowy trading company called RosUkrEnergo, which has refused to reveal who owns half of its shares.

Mr Yushchenko, who was visiting Kazakhstan before a meeting today with Russia's president, Vladimir Putin, dismissed the parliamentary resolution as "unconstitutional".
A spokeswoman for Mr Yushchenko said he would file a legal challenge to overturn the vote.

It was unclear whether the vote had legal force under recent changes in legislation. But speaking to the Guardian shortly after the vote, the former prime minister Yulia Timoshenko said: "Only as the result of corruption can Ukraine have agreed to such a secret pact. Today's dismissal of the government is a testimony that our orange revolution was not in vain. Deals can no longer be made like this, in the shadows."

Supplies of natural gas to several EU countries were disrupted last week after Moscow stopped gas flow to Ukraine following its refusal to accept a fourfold price hike for its own gas supplies.

The dispute was resolved in a deal signed between the two countries last Wednesday, but there has been mounting criticism in Moscow and Kiev over the terms. Under the agreement RosUkrEnergo, which is partly owned by Gazprom, will sell a mixture of Russian and central Asian gas to Ukraine for $95 (£37) per 1,000 cubic metres, almost double what it paid last year.

Ms Timoshenko said she had asked prosecutors to investigate the deal. "It is clear that all this is a big fraud," she said.

The Russian daily, Kommersant, alleged yesterday that Semyon Mogilevich, a Ukrainian-born businessman wanted for fraud and racketeering by the FBI, took part in the gas negotiations. Gazprom said that it had "no such information".

http://www.guardian.co.uk/ukraine/story/0,15569,1683776,00.html?gusrc=rss#article_continue

[Serb]

Who said a year ago, that Ukraine will become a wounderland under Yushenko?

Check that:

"Ukrainians Disappointed with Orange Revolution"

http://www.angus-reid.com/polls/index.cfm/fuseaction/viewItem/itemID/10439

[Serb]

"Ukraine MPs vote to sack cabinet over 'traitorous' gas price deal with Russia"

http://news.independent.co.uk/europe/article337798.ece

[VetLegion]

I just saw a report from the inauguration of Lord God Nabukodonosor (not really, but I can't remember the spelling) and Putin and Yuschenko met and were all smiles and hugs and happiness. Only you are talking about some defeat.

BTW., the only presidents who came to the inauguration are: Russia, Ukraine and Croatia