x  Kyiv to choose format for gas sector partnership with Russia by end of year

xi

^ Medvedev refuses to rule out Central Asia-Russia-Ukraine gas transit

18:1218/05/2010

http://en.rian.ru/exsoviet/20100518/159065773.html

Ukraine purchased gas directly from Turkmenistan up to 2006. Deliveries were then handled by the Rosukrenergo company until it was squeezed out of the Ukrainian market by the efforts of then-Ukrainian premier Yulia Tymoshenko. Ukraine currently only buys Russian gas.

Ukrainian President Viktor Yanukovych has said he would like the issue of Turkmenistan's gas supplies through Russia to be discussed in the future. He also said he was hoping on support from Moscow.

"This issue has never been excluded, but it can't be bilateral. It always has a trilateral character and ultimately is about our agreements with the Uzbeks or other colleagues, for example, the Turkmen," Medvedev told a Russian-Ukrainian forum in Kiev.

Russian gas giant Gazprom and Ukraine's Naftogaz are continuing to discuss issues of integration and joint projects. However the decision about building the South Stream gas pipeline has already been taken and the project will be realized, Medvedev said.

The South Stream pipeline will pump 63 billion cubic meters of Russian natural gas annually to Bulgaria, Italy and Austria and is part of Russia's efforts to cut dependence on transit nations, particularly Ukraine and Turkey.

However, Medvedev also said there was no "political" element to the decision to construct South Stream and that it did not mean that "alternatives" had to be ruled out.

KIEV, May 18 (RIA Novosti)

xii

^ Yanukovych: Ukraine eyes asset swap with Russia

http://www.kyivpost.com/news/nation/detail/68995/

 

Today at 15:52 | Reuters

ISTANBUL, June 8 (Reuters) - Ukraine could do an asset swap with Russia to get access to gas production business in Russia, Ukrainian President Viktor Yanukovych told Russian Prime Minister Vladimir Putin on Tuesday, June 8.

"We would be ready to exchange some assets in order for joint cooperation, so that we could enter into the extraction of gas in Russia," Yanukovych told Putin at a meeting in Istanbul.

xiii

^ Russia, Ukraine ready to draft fuel transit agreement
   2010-06-28 21:07:49   

http://news.xinhuanet.com/english2010/world/2010-06/28/c_13373932.htm

MOSCOW, June 28 (Xinhua) -- Russia and Ukraine agreed on Monday to draft an agreement on oil and gas transportation.

"Ukraine submitted a few additional proposals on the cooperation in the gas areas and they will be considered," Russian Deputy Prime Minister Igor Sechin said after talks between Russian Prime Minister Vladimir Putin and his Ukrainian counterpart Nikolai Azarov near Moscow.

Among the proposals, Russia offered to pay Ukraine between 47.09 and 53 U.S. dollars per ton as oil transit fees, Sechin was quoted as saying by the Interfax news agency.

Last week, Azarov said Ukraine was ready to provide about 15 to 20 billion cubic meters of gas in extra transit through its territory if the conflict between Russian gas giant Gazprom and Belarus causes a drop in Russian gas supplies to the European Union.

Also on Monday, Gazprom managed to find common ground with Belarus' Beltransgaz, the RIA Novosti news agency reported. The two companies have planned to sign an additional agreement on gas transit later this week.

Gazprom's team canceled their pre-scheduled visit to Minsk on Monday because "the parties are quite able to work remotely," according to Beltransgaz CEO Vladimir Mayorov.

A week-long energy spat between Russia and Belarus appeared to be drawing to a close as Russia resumed gas flows to Belarus and Minsk confirmed Moscow had paid it for transit fees.

Gazprom said it had restarted gas supplies to Belarus after Russian President Dmitry Medvedev had been informed by Gazprom chief Alexei Miller that Belarus had covered payment arrears of nearly 200 million dollars.

A Gazprom spokesman said late last week that there were no problems that would hinder gas transit and gas supplies to Belarus.

xiv

^ Ukraine wants to be Russia's partner in oil, gas extraction - president

Text of report by Interfax-Ukraine news agency

Istanbul, 8 June: Ukraine wants to be Russia's partner in extracting gas in Russia and invites Russian to become Ukraine's partner in extracting oil and gas on the Black Sea shelf, Ukrainian President Viktor Yanukovych has said.

"We want you to see us as partners, and we are ready to see you [as partners] not only in gas transport and consumption, but in the joint extraction, too," he said at a meeting with Russian Prime Minister Vladimir Putin in Istanbul today.

Yanukovych said Ukraine was ready to exchange certain assets with Russia in order to "set up joint cooperation to start oil and gas extraction in Russia."

"Ukraine also wants to see you as a partner in oil and gas extraction on the Black Sea shelf," he said.

Source: Interfax-Ukraine news agency, Kiev, in Russian 1255 gmt 8 Jun 10

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^ Ukrainian premier entices Russia to invest in gas pipeline upgrade

Ukrainian Prime Minister Mykola Azarov has said it would be more profitable for Russia to invest in the modernization of the Ukrainian gas transport system than to contruct the South Stream gas pipeline. Azarov was speaking in the "Test for Authorities" Q&A programme, broadcast live by the state-run UT1 TV channel on 21 May.

"At every meeting with [Russian Prime Minister] Vladimir Putin I told him that it was not profitable for Russia to contruct the South Stream. It would be more profitable for you to consider to the modernization of the Ukrainian gas transport system," Azarov said.

"I think they started to listen to our reasons," he added.

Russia's decision to build the South Stream gas pipeline was prompted by a "non-constructive stance of the previous authorities," Azarov said.

The programme lasted for one hour. No further processing is planned.

Source: UT1, Kiev, in Ukrainian 1300 gmt 21 May 10

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xvi

^ EU, Russia should upgrade Ukraine's gas transit system together - deputy PM

Text of report by Interfax-Ukraine news agency

Kiev, 26 May: Ukrainian Deputy Prime Minister Serhiy Tyhypko has advocated the parity participation of the European Union and Russia in the upgrade of Ukraine's gas transport system.

"If Europe wants (to participate in the upgrade of Ukraine's gas transport system - Interfax) without Russia's participation, one should not do this. If Russia wants to do the same without the EU's participation, it is not worth doing either," he told journalists in Kiev on 26 May.

It was reported earlier that Prime Minister Mykola Azarov repeatedly said that Ukraine's gas transport system should be upgraded as soon as possible, including with Russia's participation.

Source: Interfax-Ukraine news agency, Kiev, in Russian 1016 gmt 26 May 10

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xvii

^ Tymoshenko Calling Upon Local Council Stand Against Foundation Of Joint Ventures With Russia In Energy Sector

http://un.ua/eng/article/267114.html

 

(13:37, Tuesday, May 25, 2010)

Yulia Tymoshenko, the leader of the Bloc of Yulia Tymoshenko, is calling upon local council to make stand against foundation of joint ventures with Russia in the energy sector, reads an announcement posted at her official website.

"We have councils and if sum up all democratic forces we have the majority in all councils. We have to make public outgivings in the councils, we need the councils to vote against foundation of a joint venture with Enerhoatom, because this simply closes our opportunities, against foundation of joint ventures of Gazprom and Naftohaz," Tymoshenko said.

Besides, she thinks it is necessary that representatives of the opposition more actively bring home their position to the population, specifically via mass media.

Also Tymoshenko pointed to the need of coordinating efforts and attracting as many as possible political parties and movements to local protection committees.

As Ukrainian News earlier reported, deputy parliament speaker Mykola Tomenko of the Yulia Tymoshenko Bloc faction says it is achievement of the society and opposition that in course of the visit of Russian President Dmitry Medvedev to Ukraine the sides did not sign an agreement on establishing joint ventures in the strategic sectors of the economy.

xviii

^ Ukrainian ex-premier says opposition prevented energy, border deals with Russia

Text of report by private Ukrainian ICTV television on 25 May

[Presenter] Agreements on energy cooperation and the delimitation of the [Ukrainian-Russian sea border in the] Kerch Strait were not signed during the recent visit of [Russian President] Dmitriy Medvedev to Kiev thanks to the opposition, [former Prime Minister] Yuliya Tymoshenko has said.

It is possible that Kiev and Moscow can sign the above-mentioned agreements in summer, Tymoshenko said in Poltava on 25 May. That is why her main task for near future is to travel across Ukraine in order to discuss the joint tactics and strategy for the opposition and to try and make peace among the opposition parties.

Tymoshenko said that disagreements among the opposition parties were a negative factor that had affected the outcome of the presidential election. That is why the situation must be improved now.

[Tymoshenko] So that they [the opposition parties] do not demonstrate confrontation when Ukraine faces the challenges by those in power today. I attempt to remove all negative things that have accumulated among the patriotic democratic forces during all these years.

Source: ICTV television, Kiev, in Ukrainian 1545 gmt 25 May 10

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xix

^ Ukraine: Turboatom plans to sign contracts with Russia to $ 100 million
July 21. 2010

http://bsanna-news.ukrinform.ua/newsitem.php?id=13638&lang=en

(UKRINFORM). The volume of contracts, which plans to sign Turboatom (Kharkiv, East Ukraine) on the basis of today's Russian-Ukrainian meeting at the company, is about $ 100 millionItar-Tass Director Turboatom Viktor Subbotin.

According to him, an agreement relating to the supply of condensate in Russia and turbines for power unit № 3 of the Rostov nuclear power plant. Tomorrow Novgorod Engineering Company Atomenergoprogect plans to pay the Ukrainian company to advance on the account from which the plant intends to begin the preparation of equipment for this contract. Delivery of condensate for the Russian nuclear power plant - 1 year.

At Turboatom promise to deliver the equipment by May 2011 the company will work in three shifts. In the long term - supply of equipment for the unit № 4 Rostov NPP.

As already reported UKRINFORM, today Turboatom first place Ukrainian-Russian meeting on the supply of equipment for nuclear power stations of the Russian Federation and other countries.

OAO Turboatom produces steam turbines for thermal and nuclear power plants, turbines for hydroelectric power stations, gas turbines for thermal power plants. Manufacture of turbines is carried out in a closed cycle: from design and research to manufacturing, assembly, testing and shipment of turbines.

Office of the State part of the company's shares by the State Property Fund of Ukraine, which owns 75.22% stake in the plant.

xx

 Russia asking Ukraine consider possible return of Kremenchuk oil refinery

2 days ago at 17:41 | Interfax-Ukraine
http://www.kyivpost.com/news/business/bus_general/detail/70251/

Russia has asked Ukraine to consider the possibility of return of Kremenchuk oil refinery, Russian Deputy Energy Minister Sergei Kudryashov told reporters on the sidelines of the St. Petersburg Economic Forum.

"Yes, we have raised this issue before the Ukrainian side," he said.

However, Ukraine has not yet responded to the proposal, the deputy minister added.

"We haven't received any clear answer so far," he said.

As reported, Ukrtatnafta was created based on decrees issued by the Ukrainian president and the president of the Russian Republic of Tatarstan in 1994. The company was set up on the core of Kremenchuk oil refinery, which has the capacity to refine up to 18.6 million tonnes of crude oil per year.

Read more: http://www.kyivpost.com/news/business/bus_general/detail/70251/#ixzz0rUzWTqMy

xxi

^ Tycoon gains control of Ukrainian-Russian oil company

Ukrainian tycoon Ihor Kolomoyskyy has taken control of the Ukrtatnafta oil company, a Ukrainian-Russian joint venture. He has a majority in the company's board and bought over 46 per cent of shares, which allows him to block any shareholder meeting. This can be undone only at the presidential level, paper said, and might be discussed during Ukrainian President Viktor Yanukovych's visit to Moscow on 5 March. The following is the text of the article by Oleh Havrysh and Andriy Ledenev, entitled "Pryvat concentrated on Ukrtatnafta", published in the Ukrainian edition of Russian business daily newspaper Kommersant on 2 March, subheadings inserted editorially:

The sale

The state has no control of Ukraine's largest Kremenchuk oil refinery [run by Ukrtatnafta] any more. It became known yesterday [1 March], that the Pryvat group bought a 46.9-per-cent stake in the Ukrtatnafta closed joint-stock company. Five of nine members of the company's supervisory board represent Pryvat's interests. The situation can change only at the level of Ukrainian and Russian presidents, experts said.

A meeting of Ukrtatnafta's shareholders was held in February, at which a new membership of the supervisory board was appointed and the sale of a 46.9-per-cent stake in the company to Pryvat's structures was confirmed, the Fuel and Energy Ministry said yesterday. The ministry learnt about this from the letter by the Naftohaz Ukrayiny state-run oil and gas company (which owns 43 per cent of shares in the company). Hennadiy Korban from the Korsan limited company (which hitherto owned 1.1 per cent of Ukrtatnafta's shares and is part of the Pryvat group) told that the meeting was held on 19 February. The sale of a 18.2-per-cent stake to Korsan and a 28.7-per-cent stake to a company whose name was not disclosed was approved at the meeting. It is worth saying that even a smaller package of shares (42 per cent) allows Pryvat to have a full operational control over another oil company, Ukrnafta, in which the state owns 50 per cent and one share. In Ukrnafta, Pryvat is able to block shareholder meetings, as the law requires no less than 60 per cent of shareholders to be present.

Pryvat's interests at the refinery are now represented by five of nine members of the supervisory board headed by Valentyn Franchuk, who was previously the deputy chairman in Ukrnafta, the Fuel and Energy Ministry said. Pryvat co-owners Ihor Kolomoyskyy and Mykhaylo Kiperman, DCH group owner Oleksandr Yaroslvaskyy (he controls Korsan together with Kolomoyskyy) and Hennadiy Korban became members of the supervisory board. Apart from them, Deputy Fuel and Energy Minister Oleh Buhayev; the director of Naftohaz Ukrayiny's investment activity department, Mykola Yakovenko; the director of Naftohaz Ukrayiny's legal department, Serhiy Davydenko; and his deputy Larysa Kolesnyk are also in the supervisory board. Yaroslavskyy confirmed that he is a member of Ukrtatnafta's supervisory board but refused to say how big his stake in the company is. Representatives of [Russian oil company] Tatneft, which owns 10.1 per cent of the company's shares, were not included in the supervisory board.

Russia's Tatneft "shocked"

Tatneft was "shocked" by the news of changes in the supervisory board and "has not decided yet whether it is worth continuing court proceedings". Let us recall that the sale of the disputed 46.9-per-cent stake in Ukrtatnafta to the companies affiliated with the Pryvat group became possible after the Supreme Court ruled null and void the stake's purchase by AmRuz Trading and SeaGroup companies (18.296 per cent) and the government of Tatarstan Republic (28.7788 per cent) in 1994, following the setting up of the Ukrainian-Tatar company [Ukrtatnafta].

Korban did not rule out that Tatneft would continue to fight for the company. "However, the redistribution of corporate rights in the company has been already confirmed, and Tatneft has few arguments in its arsenal," he said. "The decisions taken at the shareholder meeting were a gift to Ukrtatnafta's Pryvate shareholders. It will be extremely difficult to return Tatneft's property," Astapov Lawyers' executive partner, Andriy Astapov, said.

Dispute likely to continue at political level

Until now, the Fuel and Energy Ministry opposed Naftohaz Ukrainy's participation in the shareholder meeting. Minister Yuriy Prodan earlier said that Naftohaz did not agreed its position at the meeting with him. Nonetheless, a member of parliamentary committee for fuel and energy complex, MP Serhiy Tulub, said that the decision of Ukrtatnafta's shareholder meeting could not happen without the cabinet's consent. "The fact that Oleh Buhayev was appointed member of the supervisory board showed that Naftohaz could not but agree its position with the government," Tulub said. Buhayev was appointed deputy fuel and energy minister at the initiative of the head of prime minister's advisory group, Vitaliy Hayduk.

The conflict around Ukrtatnafta may continue at a political level. "Ukrtatnafta's issue will certainly be discussed at President Viktor Yanukovych's forthcoming talks in Russia. It was always discussed at talks between [Russian and Ukrainian] prime ministers Vladimir Putin and Yuliya Tymoshenko," Tymoshenko's adviser and a member of the parliamentary committee for fuel and energy complex, MP Oleksandr Hudyma, said. "In view of Viktor Yanukovych's desire to improve relations with Russia, I think it is too early to put an end to the dispute."

Source: Kommersant-Ukraina, Kiev, in Russian 2 Mar 10, p 1

xxii

^ Ukrainian premier hopes Customs Union not to affect mutual trade

Ukrainian Prime Minister Mykola Azarov has said that it is necessary to make sure that the creation of the Customs Union of Russia, Belarus and Kazakhstan does not affect the free trade of Ukraine with these countries, the Ukrainian Inter TV channel reported on 21 May.

"It is extremely important for Ukraine that the creation of the Customs Union does not negatively affect the bilateral free trade with the union member countries and does not limit the volume of bilateral trade. Our position is that the list of exclusions [of goods from free trade] should be minimal and, ideally, should be cancelled at all. We are ready to cooperate in this direction," Azarov said at the CIS summit held in St Petersburg on 21 May.

Azarov said that Ukraine was interested in setting up a bank together with CIS member states, the Interfax-Ukraine news agency said at 1648 gmt on the same day.

"We are interested in the work of a joint bank with the authorized capital of 10bn dollars," Azarov said. He added that Ukraine was also interested in creating an anti-crisis fund within the CIS, as a source of investment.

At the summit, Azarov met his Belarusian counterpart Syarhey Sidorski, the Ukrainian news agency UNIAN said at 1637 gmt. Azarov said that Ukraine was interested in the transit of Venezuelan oil to Belarus. "We are interested in the oil transit via Ukraine, we earn from this. This is just a matter of price," he said.

Azarov said Ukraine did not consider cooperation with Kazakhstan in the nuclear sector, UNIAN said at 1646 gmt. "Our task now is to develop our own [uranium] mines. I mean, to develop our own capacities. That is why we are in talks on the development of our own mines, and Russia's participation in it as an investor in a plant construction or as a side that would be interested in the use of our raw materials," Azarov said.

Sources: Inter TV, Kiev, in Ukrainian 1700 gmt 21 May 10; Interfax-Ukraine news agency, Kiev, in Russian 1648 gmt 21 May 10; UNIAN news agency, Kiev, in Ukrainian 1637 gmt 21 May 10; UNIAN news agency, Kiev, in Ukrainian 1646 gmt 21 May 10

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xxiii

^ CODE: UA111
PUBLICATION:  yes
ATTRIBUTION: STRATFOR sources in Kiev
SOURCE DESCRIPTION:  A Romanian diplomat in Kiev
SOURCE RELIABILITY: B
ITEM CREDIBILITY: 2
DISTRIBUTION: Analysts
HANDLER: Lauren
 
MILITARY:
 
BLACK SEA FLEET:  The most important and the most symbolic is the signature on 21 April of the Kharkov agreements. In exchange for a 30% reduction in the price of natural gas delivered to Ukraine, Russia obtains the right to maintain its Black Sea fleet in Sebastopol until 2042 while under the terms of the 1997 bilateral treaty it would have had to withdraw in 2017.
 
NATO: That decision, ratified in the Rada a few days later in special conditions in reality is a de facto closure of Ukraine’s pursuit of NATO membership.  The vote at the beginning of June of a law “on the foundations of the country’s domestic and foreign policies” underlining its “no bloc” character will consecrate this ideological change.
 
OTHER SECURITY: Kiev supports President Medvedev’s initiatives on a refoundation of European security and takes a common position with Russia on the question of the unresolved conflict in Transdniester.
 
ECONOMIC
 
TARGETS: The Russians are most keen on three sectors: civil nuclear energy  (Rosatom is one of the tools being used to target Ukraine. This has been seen in several operations: the signing by TVEL of fuel supply contracts for Ukrainian power stations; the provision of credit – said to total $5bn – for the construction of additional capacity at Khmelnitsky; creation of a joint venture between Turboatom, a Kharkov-based company which produces semi-rapid turbines, and Atomenergomash. Finally, Sergey Kirienko is striking plans for ARMZ to be invited to exploit the giant Novokonstantinovka deposit, which accounts for most of Ukraine’s estimated 100,000 tonne reserves.), aerospace (Moscow is seeking a closer relationship between the Russian aerospace holding company OAK and Antonov) and shipbuilding (the Ukrainian assets targeted by Russia are Nikolaev’s TchSZ, Zarya-Mashproekt and More).
 
FINANCIAL: Moscow also put its hand into its pocket when in mid-June it granted Ukraine a $2bn loan that should enable Kiev to balance its books until an agreement can be reached with the IMF for a new aid programme worth about $20bn (an initial $16bn stand-by loan had been approved in autumn 2008 but the transfer of the last instalments were suspended at the end of 2009 for failure to respect Yulia Timoshchenko’s commitments).
 
CULTURAL
 
HISTORICAL REVISIONS: Over the last few weeks the new Ukrainian establishment has made several other important gestures to Moscow. With regard to questions relating to the interpretation of history, Viktor Yanukovich for example spoke of the major famine of 1932-33 at the rostrum of the parliamentary assembly of the Council of Europe. The organization in Kiev of a big military parade on 9 May highlighted the fact that the new regime is taking a step back from interpretations of the Second World War – especially the role of the Insurrectional Ukrainian Army (UPA) as put forward by the “orange” establishment.
 
EDUCATION: The appointment of Dmitry Tabachnik as minister of Education also sent a strong message to the Kremlin. This cultured intellectual, between 1994 and 1996 an official in Leonid Kuchma’s administration, then deputy prime minister and a parliamentary deputy for the Party of Regions is in fact known for detesting the Ukrainian nationalism. Since he was appointed he has been striving for a return of Russian language teaching and has announced the preparation of new history books that reject the dogma of nationalism disseminated for years by the Ukrainian State. On the question of language Moscow will not obtain Russian becoming Ukraine’s second official language. But the new Kiev government currently is drafting a series of legislative texts that envisage the transfer of competency in this sensitive area to the regions. This soon will result in a bilingualism recognised in most of the provinces that, in reality, will means a strong return of the Russian language in administration, and especially in the courts.
 
REPRESENTATION:  Russia has accepted a definition of land borders and has promised to defend Ukraine’s interests in multilateral forums such as the G20.

--

xxiv

^ Ukrainian, Russian nuclear energy companies sign accord on fuel supplies

Text of report by private Ukrainian news agency UNIAN

Kiev, 1 June: The [Ukrainian] national nuclear energy company Enerhoatom and the open joint-stock company TVEL (Russia) have signed a long-term contract on nuclear fuel supplies after 2010.

UNIAN learnt this from Enerhoatom's press secretary Nataliya Kozlova.

According to Kozlova, the contract was signed by the president of Enerhoatom, Yuriy Nedashkovskyy, and the president of the TVEL company, Yuriy Olenin, in Kiev on 1 June.

Kozlova did not specify details of the contract for confidentiality reasons.

"The only thing I can say is that the contract was signed on mutually beneficial terms and its provisions do not contradict the two countries' laws," she said.

Source: UNIAN news agency, Kiev, in Ukrainian 1456 gmt 1 Jun 10

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