Posts Tagged ‘gas

11
May
10

Ukraine says no to gigantic gas merger

Vladimir Putin celebrated last March the election of pro-Russian Viktor Yanukovych as Ukraine president. Party time’s now over! The face of Ukraine has changed but the core problem between Ukraine and Russia remains : gas! Viktor Yanukovych just said no to Putin proposal to merge Russian giant Gazprom with its ukrainian counterpart Naftogas. It’s getting complicated!

Ukrainian president Viktor Yanukovych put a pin in Russian Prime Minister Vladimir Putin “impromptu” trial balloon to merge Russia‘s gas monopolist Gazprom and its Ukrainian counterpart Naftogaz and again burnished his pro-EU foreign policy stance, saying any merger would have to be done with concerted talks with the EU.

“If we decide to begin talks [about the merger] we should include the EU at a certain stage as the main consumer of gas and the main partner,” Yanukovych said reports The Moscow Times.

Yanukovych has been widely tarred with the accusation that he is “pro-Moscow”, however, his actions during his first months on the job suggest exactly the opposite.

However, reading too much into Yanukovych’s comments is dangerous as domestic politics also play a big part in this issue as Naftogaz is seen as a national treasure (rightly so) and the president cannot be seen to give away the company to Russia without doing lethal damage to his standing at home – especially in the east of the country.

Yanukovych made his first public comments on the merger since Putin floated the idea during meetings with Ukrainian officials last week. Moscow will certainly be disappointed as the point of the deal was to cut the EU out of any involvement in the gas transport over Ukraine’s territory.

“The most important thing for Ukrainian national interests is that its gas-transportation system is reliable,” Yanukovych said.

A subsidiary deal to the $40bn discount Russia has handed Kyiv is a badly needed project to upgrade the aging pipeline network. Kyiv has been in both Brussels and Moscow to look for help with paying for new pipes, but it has also made it clear that it would rather do the work together with both Russia and the EU rather than favouring one over the other.

The upgrade would mean an extra 200 billion cubic meters of Russian gas could be sold to Europe per year within five years, up from 120 billion cubic meters now, the president said.

The politics of the upgrade are also complicated by Russia’s plan to build a new pipeline called South Stream that would deliver gas to southern Europe and by pass Ukraine completely. However, analysts have questioned the economic viability of this project and an expansion of the Ukrainian pipeline network would he a far cheaper option and further undermine the viability of South Stream. Where the gas would come from to fill South Stream is another unresolved question hanging over the project.

Putin’s spokesman, Dmitry Peskov, said last week that the deal would most likely take the form of an equity swap between the two firms. Gazprom may use about 5 percent of its own shares to acquire Naftogaz, Kommersant reported Tuesday, citing Peskov.

Analysts have pointed out this is unlikely as it would reduce the state’s stake in Gazprom to below 50pc – something banned in Russian law. Other analysts have suggested that if the deal goes ahead a joint venture of some sort is much more likely.

Naftogaz said Wednesday that it paid more than $419 million for April gas imports from Russia, which included a discount of $100 per 1,000 cubic meters of fuel.

Still, the deal is not a right off. Putin knew this deal was going to be hard to negotiate and even harder for Yanukovych to sell at home. But if it happens it would at a stroke end the fears over energy security for western Europe as well as giving the cash-strapped Ukraine access to more money that the gas sales generate. So it is very tempting.

Ukrainian Prime Minister Mykola Azarov was cautiously positive in statements on Wednesday, obviously suggesting that Moscow should supply more details.

“The proposal merits attention. We’ll naturally examine it because it was made by the prime minister of a very large state, our neighbour, out of good intentions,” Azarov said.

Gazprom CEO Alexei Miller said the energy ministers of Russia and Ukraine would meet in Moscow with the management of Gazprom and Naftogaz after the May holidays (after May 10) to discuss the details of a possible merger.

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01
Nov
09

Putin sets Russian opinion for a new gas conflict with Ukraine

Prime Minister, and yet Russia’s real boss for many, has been quite agressive these dayss toward Ukraine and its pro-West president Viktor Yushchenko.

Putin said journalists last week that he was anticipating new tensions with Kiev on the gas issue because President Yushchenko was unwilling to pay gas payments and was blocking due payments.

Vladimir Putin who is trying very hard these days to appear as a humble Prime Minister, said journalists he contacted Ukrainian PM Yulia Tymoshenko to discuss the issue and that Ms Tymoshenko informed him that Yushchenko was blocking the payments.

It’s twice clever from Putin to have acted that way. It first makes a (little) more credible the fiction that he is not president anymore and that he respects Russian etiquette. That’s for PR and to please US diplomats… But the most clever of all is to push the button which hurts Ukraine. Not only gas (it’s been known for a while), but less and less silent dissensions between Yushchenko and Tymoshenko.

Political situation in Ukraine is indeed quite tense and it is not a secret anymore that the president and his PM, who once were the closest allies (they were the two natural leaders of the Orange revolution) would love to get rid of each other.

Yushchenko would love to have a new, a more flexible and less ambitious PM… Tymoshenko would love to see her boss getting retired and become the next president.

Putin perfectly knows these facts and apparently and tactically chose his side. He was kind enough to let the world know that despite his talks with Tymoshenko, Yushchenko was blocking the whole process.

As a result of this irresponsible move, Ukraine might not get any gas this winter. Putin’s bet is that Ukrainian won’t be very happy with this situation… He’ll then let Tymoshenko do her job!

The situation is not as critical and probably will never be. But this is definitely the game Putin is playing these days. Will Tymoshenko accept to play the same game, If she gets too power will she be mor flexible?

I’m actually not sure about that and that’s were Putin’s strategy appears a bit hazardous. Throughout her career and lifetime Tymoshenko has always appeared as the most agressive Ukrainian politicans toward Russia. If I were Putin I’d rather try too do business with Yushhchenko who is more of a pragmatic leader.

But maybe Putin knows facts that I don’t. Maybe we’ll witness in the coming months of years to come, secret deals…