Saturday, January 07, 2006

Христос Рождається — Славімо Його!

photo.unian.netВінчую Вам нині усі добрі люди
Нехай Божа поміч завжди з Вами буде.
Нехай тої днини, кожної години,
Бог благословить, біда хай загине.

Маленький Ісусик не спить, не дрімає,
Своїми рученятами весь світ обіймає.
І вашу хатину, і вашу родину,
І всю Україну – Христос ся рождає!

* * *
Blessings to you on this day good people
Let the God's help always with you be.
On this day, every hour
Let God bless, let misfortune perish.

Baby Jesus sleeps not, dreams not,
With his little hands, he embraces the world.
And your home, and your family,
And all of Ukraine - Christ is born!

Friday, January 06, 2006

Agreement Between Naftohaz and Gazprom (English)

Text published by Ukrainska Pravda, 5 January 2006

[Translated into English by Olga Bogatyrenko for UKL]

Agreement Regulating Relations in the Gas Sphere
Moscow, 4 January 2006

The open joint stock company (OAO) "Gazprom" (Russian Federation), subsequently referred to as Gazprom, represented by Management Chairman A. B. Miller acting by the Statute, on the one Side,

The National joint stock company "Naftohaz of Ukraine (Ukraine), subsequently referred to as Naftogaz of Ukraine, represented by Management Chairman O. G. Ivchenko, acting by the Statute, on the other Side,

And the Company "RosUkrEnergo" (Switzerland), subsequently referred to as RosUkrEnergo, represented by Executive Directors O. A. Pal'chikov and K. A. Chuichenko, acting by the Constitutive Agreement,

Referred all together as the Parties,

Seeking to reach a mutually beneficial agreement on the regulation of relations in the gas sphere, have worked out the present Agreement, agreeing on the following:

1. The Parties agree that the price of transit of natural gas, which belongs to Gazprom (Ltd. Gazexport) and RosUkrEnergo, across the territory of Ukraine and the Russian Federation is to be set at US $1.60 per 1000 cubic meters per each 100 km of transit until 01.01.2011.
2. The Parties appoint RosUkrEnergo as the supplier of natural gas to Ukraine. Starting from 1 January 2006, Gazprom does not supply Russian natural gas to Ukraine and Naftohaz of Ukraine does not export natural gas that arrives from the Russian Federation.
3. Naftohaz of Ukraine and RosUkrEnergo are to found a joint venture on the basis of cash deposits and other assets as soon as possible and not later than 1 February 2006 in order to provide Russian natural gas for consumption at Ukraine's domestic market.
4. The Parties are to work out necessary agreements/contracts (and are to assure working out of necessary agreements/contracts) creating, starting from 1 January 2006, the commodity balance of gas of company RosUkrEnergo to cover the following volumes:

- 41 billion cubic meters of Turkmen gas that is to be purchased from Ltd. Gazexport and Naftogaz of Ukraine, which is at their disposal.
- Up to 7 billion cubic meters of Uzbek gas that is to be purchased from Ltd. Gazexport in order to, specifically, swap existing gas deliveries in the South Caucasus.
- Up to 8 billion cubic meters of Kazakh gas that is to be purchased from Ltd. Gazexport in order to, specifically, swap existing gas deliveries in the South Caucasus.
- Up to 17 billion cubic meters of Russian gas that is to be purchased from OAO Gazprom at the price determined by the formula based on the base price of gas (Ro= US $230 per 1000 cubic meters).

On sales:
- In 2006, 34 billion cubic meters of gas to be sold at the price of US $95 per 1000 cubic meters of gas, which is valid for the first six months of 2006 to the joint venture created in accordance with point 3 of the present Agreement (until the joint venture is created, until 1 February 2006 to be sold to Naftogaz) for the subsequent sale for consumption in Ukraine's domestic market without re-export rights.
- Starting from 2007, up to 58 billion cubic meters of gas to be sold to the joint venture created in accordance with point 3 of the present Agreement for subsequent sale for consumption in Ukraine's domestic market without re-export rights.
- 15 billion cubic meters of gas to be forwarded for export for joint programs with Gazprom.

5. The rate of pay for transit and the price of natural gas determined by the present Agreement can be changed only by mutual agreement of the Parties.

Addresses of the Parties

OAO Gazprom: 16, Nametkin Str, Moscow, Russia, 117997
NJSC Naftohaz of Ukraine: 6, Bogdan Khmelnitsky St., Kyiv, 01001
Company RosUkrEnergo A": 7 Bahnhoffstrasse, Zug, Switzerland

Signed by:
A. B. Miller on behalf of OAO Gazprom
A. G. Ivchenko on behalf of NJSC Naftohaz of Ukraine
O. A. Pal'chikov, K. A. Chuichenko on behalf of Company RosUkrEnergo AG

Wednesday, January 04, 2006

Murky Gas Deal - Murky Gas Company

So, they struck a deal... No more barter, that is cash is paid, both for gas and for transit. The previous deal was gas for transit. RosUkrEnergo is not only the middleman but the exclusive supplier of gas to Ukraine.

Ivchenko via :
we shall be buying gas of different origins, both russian and central asian, from the rosukrenergo company. the price of gas will be 95 us dollars per 1,000 cu.m. at the russian-ukrainian border. i want to add that the price of gas and
the transit rate are not linked because we shall be paying money for gas and gazprom will be paying us money for the transit of russian gas to europe. the transit rate has been raised from 1.09 to 1.6 dollars per 1,000 cu.m. of gas per 100 km.

About former SBU head Turchynov beginning an investigation of RosUkrEnergo from a Kyiv Post article reprinted on Kiev Ukraine News Blog via Neeka's Backlog:

The State Security Service (SBU) has launched probes into alleged violations by gas trading firms that allegedly siphoned more than a billion dollars from state coffers when they worked as intermediaries handling Turkmen gas supplies to Ukraine.

SBU chief Oleksandr Turchinov told the Post on June 17 that an investigation has been launched into the activities of Swiss-registered RosUkrenergo and intermediaries that handled Turkmen gas supplies to Ukraine in previous years.

Like its predecessors, RosUkrEnergo acts as an intermediary in transiting gas from Turkmenistan across Russia and other former Soviet states to the Ukrainian border. Its shareholder structure remains a bit cloudy.Company officials have said that affiliates of Russian gas giant Gazprom and Austria’s Raiffeisen Investment AG own parity 50/50 stakes in the venture.Turchinov told the Post that Raiffeisen Investment AG, according to his information, acts as a nominal shareholder representing private interests of individuals whom he declined to name for fear of revealing inner workings of the investigation.

Turchinov said RosUkrEnergo, a company which has an annual turnover of more than a billion dollars, could not have been created without the approval of the most influential people in Russia and Ukraine. Severe infringements were discovered in the company’s dealings, he said, adding that such schemes involve siphoning of funds which should have flowed into the state budget, rather than having been diverted into private hands.

A RosUkrEnergo top manager revealed to the Post in an interview last week that Raiffeisen Investment’s role in RosUkrEnergo was bound to contractual arrangements with Ukrainian clients, which he could not identify...

To round it all out the deal story in a nutshell from Dow Jones:

Greg Walters,
Dow Jones Newswires
Moscow, Russia,
Wednesday, January 4, 2006

MOSCOW -- Russia and Ukraine Wednesday announced a 2006 gas deal aimed at breaking a stalemate that had choked off supplies to Ukraine and other European countries over the last several days.Under the agreement, state gas monopoly OAO Gazprom(GSPBEX.RS) will sell gas to its 50%-owned trading company RosUkrEnergo at $230 per 1,000 cubic meters. The trading company, which will also buy Central Asian gas at a much lower price, will then sell gas to Ukraine at $95 per 1,000 cubic meters, less than half the price Russia has recently demanded.The parties also agreed that Russia will now pay cash for the transit of gas across Ukraine. Previously, Russia paid in gas.

The price for transporting gas through Ukraine to Europe rose under the deal to $1.60 for 1,000 cubic meters traveling through 100 kilometers of pipeline, from $1.09.Under the deal, reached at 2:30 a.m. Wednesday morning between the heads of Gazprom and Ukrainian gas distributor Naftogaz, gas exports from Turkmenistan will be purchased by RosUkrEnergo and re-sold to Ukraine, a person familiar with the situation told Dow Jones Newswires. The person didn't say how much Turkmenistan gas will be sold to RosUkrEnergo or at what price.Gazprom had previously contracted 30 billion cubic meters of gas from Turkmenistan at a price of $65 per 1,000 cubic meters.

Ukraine also agreed to pay cash for Russian gas in the future. Previously it took gas in trade for transport. A Gazprom spokesman said the five-year contract foresees prices fluctuating according to world prices. Under the deal, "RosUkrEnergo, is the exclusive gas exporter to Ukraine" said, Gazprom spokesmen Sergei Kupriyanov.Russia Sunday triggered a gas supply crisis in Europe when it cut off exports to Ukraine after its neighbor rejected a price hike to $230 per 1,000 cubic meters, more than four times what it had been paying.

More than 80% of Russia's gas supply to Europe travels across Ukraine. Shortly after Russia cut off Ukraine's supplies, France, Italy and a number of other European countries reported a sharp fall off in gas deliveries from Russia. Russia Tuesday increased supplies to make up for the shortfall.The deal appears to be a complex face-saving agreement that still allows Gazprom to keep the $230 price it has insisted upon, while allowing Ukraine to pay less than half that amount.

Now it's time to figure out who's going be making the big bucks.

Tuesday, January 03, 2006

Russia Acts Illegally OR What Else is New?!?

Former economic advisor to Putin, Andrey Illarionov, who resigned on December 27 because of 'differences of opinion on economic policy,' in an interview aired on Jan. 02 on Ekho Moskvy and quoted by BBC Monitoring Services said Gazprom had no right to cut off gas supplies to Ukraine on 1 January because an earlier agreement with importer Naftohaz Ukrayiny made it impossible for Gazprom to force a price rise to 230 dollars per 1,000 cubic metres.

"Today's prices, 50 dollars per 1,000 cu. m., were set by a supplementary agreement to a contract between Gazprom and Naftohaz [Ukrayiny] which was signed on 8 August 2004. The contract, according to the text of the supplementary agreement, is to be in effect for five years, up to 2009. The supplementary agreement states that the price of 50 dollars per 1,000 cu. m. is fixed. For those who don't fully understand the meaning of the Russian word fixed, it says two lines further down that these prices are not changeable."

Ukraine is willing to negotiate increased rates but is not willing to submit to political and economic blackmail. And as Spiegel put it:
The current mood in Ukraine could likely be best described with the slogan: "We would rather freeze than give in."

Monday, January 02, 2006

Ukraine MFA: Russia's "Irresponsible and destabilizing actions"

Reacting to Russia's illegal cut-off of gas supplies to the EU and Ukraine, the Ministry of Foreign Affairs of Ukraine released a statement charging Russia with "violating its contractual obligations... to Ukraine and EU member-states"

The statement in Ukrainian can be found here. Pipes and a pressure gauge are pictured at a Ukrainian main pipeline in the village of Boyarka near the capital Kiev January 2, 2006 -photo-Reuters

Below is an unofficial translation:

January 1, 2006

On the first day of 2006, the Russian Side, violating its contractual obligations started to decrease the volume of gas supply to Ukraine and EU member-states.

In such a way, a scenario was launched, with the aim to exert economic pressure, blackmail, and, ultimately, destabilize the Ukrainian economy and disrupt Russia's gas supplies to consumers in EU countries.

Aforementioned irresponsible and destabilizing actions are put into practice in spite of current international obligations of the Russian Side, undertaken in compliance with the Agreement of October 4, 2001, as well as in spite of compromise proposals, put forward on December 30, 2005 by the President of Ukraine in his letter to the President of the Russian Federation, and notwithstanding cautions concerning the peril of such steps for the atmosphere in relations between Ukraine and Russia, and their perception by the Ukrainian society.

The Russian Side rejected all concrete proposals on prices and tariffs, submitted by the Ukrainian delegation during the negotiations in Moscow on December 27-30, obstinately insisting on the so-called "market" price of $ 230 for 1000 cubic metres of gas. Meanwhile, the Ukrainian Side was ready to agree upon gradual transition to market methods of cooperation in gas sphere.

Furthermore, Moscow "did not hear" the proposal of the President of Ukraine in regard of declaring a moratorium on changing prices and tariffs before accomplishing talks that were suggested to be held with the participation of international experts during the first ten days of January 2006. Finally, the Russian Side rejected the official commentary, submitted to the Russian Federation on December 31, 2005, in a note of the MFA of Ukraine. The document clearly substantiated the validity of the position of the Ukrainian Side based on current contractual obligations of the Parties. The regrettable facts of demonstrative neglect of the contract in force and decreasing the volume of gas supply display the existence of certain forces in Moscow that spur the country on the way of unpredictability and blackmailing in regard of consumers in all countries.

The intimidations sounded by the statement of the MFA of the Russian Federation of January 1, 2006, are merely intended for poorly informed Russian citizens, lulled by bridled analysts and controlled mass-media. Politicians and societies of Ukraine, EU countries and the US are perfectly aware of the fact that, in compliance with the current contract of 2002 and with the Supplement ?4 to this contract of August 9, 2004, Russian companies are obliged to supply gas to Ukraine on a fixed terms in order to ensure the transit of Russian gas via Ukrainian territory to the EU member-states and other countries.

Ukrainian Side is ready to prove consistently the validity and fairness of its position by all means, including through the international arbitration. We consider the possibility of an appeal to nuclear states - the guarantors of Ukraine's national security according to the Memorandum of 1994 - in order to apply the mechanism of consultations.

Irresponsible and destabilizing actions of certain forces in Moscow that apparently do not even inform their own authorities about the actual state of affairs, threaten with undermining the image of Russia as a reliable partner in energy sphere in the very year of its chairing in G-8, as well as with considerable losses for Russian taxpayers, who will have to pay off the doubtful financial consequences of such a policy. Hence, it is easy to predict, how the North-European gas pipeline will be used.

Thereupon, the MFA of Ukraine is authorized to state the following:

1. Ukrainian Side insists on the transition to market principles of cooperation in gas sphere and on introduction since January 1, 2006 of prices for gas supplies and tariffs for its transit in compliance with European pricing methods.

2. We suggest both delegations to renew the negotiation process involving international experts.

3. We propose to set a moratorium on non-market methods of settling existing disagreements.

4. Ukraine will proceed with its efforts to remain a reliable transporter of Russian gas to the EU member-states and other countries in accordance with the contracts in force, even though the fulfilment of our obligations will be carried out at the expense of the own gas resources that are not supplied by Russia for this purpose. At the moment, the energy security of the gas consuming states is seriously threatened and no country could be excluded in this context. All this requires coordinated efforts of natural gas producing, transporting and consuming states and that is what Ukraine urges for.

January 1, 2006

Sunday, January 01, 2006

Overheard in Kyiv Supermarket

"Sorry, all we have is Russian mustard."

"No thanks. I don't buy Russian."

Other customers laugh, "Neither do we!"