Voice of Russia: Putin, Azarov to discuss gas issues

RIA: Russia unlikely to make concessions on gas deal - paper

Russia is unlikely to make concessions to Ukraine as Ukrainian Prime Minister Mykola Azarov arrives on Thursday in Moscow to seek a new gas deal with the Kremlin, a respected daily said on Wednesday.

Russian Prime Minister Vladimir Putin will meet Azarov to discuss a wide range of bilateral issues, including in the energy sphere.

Ukraine has offered Russia a stake in its state gas transportation system, involving the EU and Ukrainian companies. The system currently accounts for about 80% of Russian natural gas exports to Europe.

In return, Kiev wants cheaper gas prices.

However, Moscow has repeatedly indicated that the creation of the consortium, which would give the Russian gas giant Gazprom direct access to Ukraine's gas market, would not necessarily mean lower prices for Ukraine.

"We are absolutely satisfied with the gas deal [signed] on January 19, 2009, and we have to understand what Russia will get in return before giving the go-ahead to making amendments," Kommersant quoted a source in the Russian government as saying.

"If we lose $3 billion here, then we will have to earn it elsewhere," a source in Gazprom told Kommersant.

However, Azarov himself seems somewhat more enthusiastic.

"We expect that a bilaterally beneficial draft project [on Russian gas supplies to Ukraine] will be worked out and we will jointly implement it. We should certainly find a compromise solution, which would make the development of Ukraine's economy possible," he said in Kiev on the eve of the meeting.

Ukrainian President Viktor Yanukovych, who came to power in February after narrowly winning a presidential runoff, has been seeking to revise a long-term gas deal signed by ex-premier Yulia Tymoshenko and the Russian prime minister in early 2009.

Last year, Russia reduced its gas price for Ukraine by 20%, but in 2010, a market price, which fluctuates depending on oil prices, was introduced. In the first quarter of this year, Ukraine will pay $305 per 1,000 cubic meters of Russian gas. The price will grow to $320 in the second quarter due to rising oil prices.

Ukraine's gas transportation system is Europe's second largest gas pipeline network and the main route for Russian natural gas supplies to European consumers. In early 2000, Kiev and Moscow discussed the possibility of creating a gas transport consortium with the involvement of EU partners to manage and modernize Ukraine's Soviet-era gas pipeline network.

The project was put on hold when West-leaning President Viktor Yushchenko came to power in Ukraine in 2004.

Russia has made repeated attempts to obtain a stake in the Ukrainian gas pipeline network to modernize the system and ensure uninterrupted gas supplies to Europe. Ukraine has so far resisted, saying a consortium with Russia would jeopardize its sovereignty.

MOSCOW, March 25 (RIA Novosti)

25.03.2010, 11.38

MOSCOW, March 25 (Itar-Tass) - Russian Prime Minister Vladimir Putin will hold talks on Thursday with his new Ukrainian counterpart Nikolai Azarov on the development of economic cooperation, including in the energy sphere. Specifically, they will discuss Russian gas deliveries to Ukraine.

A working visit to Russia will be the first visit abroad of Azarov, 63, who was approved on the post of prime minister by the Ukrainian parliament on March 11 on the suggestion of President Viktor Yanukovich.

“The coming talks in Moscow will be the continuation of an all-round concrete dialogue with the Ukrainian partners. It will permit to discuss without delay the topical problems of bilateral cooperation,” the press service of the Russian government reported. “Specifically, the two prime ministers plan to discuss a wide range of issues dealing with bilateral cooperation in the trade and economic sphere, including the energy sector and the gas industry. They will discuss prospects for a further development of Russian-Ukrainian production cooperation, primarily in the high-tech sectors – aircraft building, space exploration and nuclear power engineering.”

Putin and Azarov are expected to coordinate the date and the agenda of the sixth meeting of the economic cooperation committee under the Russian-Ukrainian Interstate Commission.

On the results of 2009, Ukraine is the sixth biggest trade partner of Russia after the Netherlands, Germany, China, Italy and Belarus.

Trade turnover between the two countries was perceptibly reduced in 2009 as a result of the world financial and economic crisis, but now bilateral trade is showing clear signs of revival. In January 2010 trade turnover with Ukraine grew almost by two-fold in comparison with the corresponding period of 2009 to reach 2,132.8 million dollars. Russian exports amounted to 1,539.9 million dollars (plus 272.2 per cent as against January 2009), and Russian imports amounted to 592.9 million dollars (plus 125.0 per cent).

On January 19, 2009, Gazprom and Naftogaz Ukrainy signed a contract on the purchase and sale of Russian gas for the period of 2009-2019, and a contract on the amount and terms of the natural gas transit by the Ukrainian territory for the period of 2009-2019. The parties agreed on the European gas price for Ukrainian consumers in 2009 with a 20 per cent discount, and on the keeping in 2009 of the 2008 transit rate, which was in effect on the Ukrainian territory. Besides, they agreed that they would pass over to the market gas price and the market gas transit tariffs, starting from 2010. The gas purchase and sale contract for 2009 fixed the annual amount of gas deliveries equal to 40 billion cubic metres. Every quarter the price was revised according to the formula, which takes into account the changing of prices indexes of fuel oil and gas oil. Aside from it, the contract includes the “take or pay” provision for 80 per cent of the annual amount of gas deliveries (32 billion cubic metres) and fines for the failure to import the agreed amount of gas.

Naftogaz Ukrainy did not import the agreed amount of gas in 2009. Gas imports for Ukrainian consumers amounted only to 26.83 billion cubic metres. The reason for the reduction is a slump in the industrial sector of Ukraine, as well as a large amount of gas kept in its underground storages. Considering a difficult financial situation of Naftogaz Ukrainy, Gazprom did not take advantage of its right to impose a fine for the failure to import the agreed amount of gas.

On November 24 Naftogaz Ukrainy and Gazprom signed a supplement to the contract for gas deliveries, in which the parties coordinated the reduction of Russian gas deliveries to Ukraine in 2009 and 2010 down to 33.51 and 33.75 billion cubic metres respectively.

At the request of Naftogaz Ukrainy, Gazprom made an advance payment for part of the services, connected with gas transit by the Ukrainian territory to the sum of 2.15 billion dollars. The part of the Gazprom advance payment, which was left by January 1, 2010, ensured the payment for gas transit by the Ukrainian territory in January, February and partially in March 2010.

Gazprom gas deliveries to West European countries by the Ukrainian territory amounted to 92.8 billion cubic metres in 2009 (under the gas transit contract, the figure should have been 116.9 billion cubic metres).

Ukraine is one of the main countries in which the Russian business makes investments. The presence of the Russian capital in Ukraine is gradually growing. Russian companies prefer to make investments in the basic branches of the Ukrainian economy: the fuel and energy complex, the chemical industry, steel making, machine building, metal working and the banking sector. Investments in the construction complex, in the hotel and restaurant business have shown a perceptible increase of late.

The main Russian investors include Gazprom, RusAl, LUKOIL, Tatneft, TNK-BP, SUAL-Holding, Vympelcom, MTS, Systema AFC, Wimm-Bill-Dann etc.

On January 1, 2010, direct Russian investments in the Ukrainian economy amounted to 2.7 billion dollars (some 7 per cent of the overall amount of direct foreign investments).

Ukraine’s direct investments in Russia on January 1, 2010, amounted to 165.5 million dollars. A major part of investments was made in the manufacturing industry (44 per cent of overall investments) and the financial sector (30 per cent). Ukrainian investors are also making substantial investments in the Russian pulp-and-paper complex, ferrous metallurgy, machine building and metal working.

The development of production cooperation in the aerospace industry is regarded as one of the most promising directions of Russian-Ukrainian cooperation. Specifically, Russian and Ukrainian enterprises are developing cooperation in the production of the An-70 military-transport planes, as well as the An-140, An-148 and Tu-334 civilian airliners. Besides, they plan to start mass production of aircraft motors for Yak-130, Be-200 planes, as well as helicopters, and to resume mass production of planes of the An-124 series.

In the sphere of space exploration, the two countries are developing cooperation in the designing, modernization and operation of carrier vehicles (booster rockets), rocket launching services, the designing and operation of space systems for long-distance Earth sounding, including environmental monitoring and weather forecasting, as well as the use and development of the Russian navigation GLONASS system.