Ukraine's leading English-language newspaper since 1995

Cash-strapped Ukraine is in a rush to complete reconstruction of Kyiv's Olympic Stadiuim before the Euro 2012 soccer tournament. Yaroslav Debelyi Ukraine: Election won’t derail Euro 2012

(Reuters) – Ukraine has moved to reassure European soccer’s governing body UEFA that the bitterly contested presidential election called for January will not derail its preparations for the Euro 2012 championship.

“UEFA is worried the forthcoming election in Ukraine may influence the preparations (for Euro 2012),” Deputy Prime Minister Ivan Vasyunyk told reporters on Nov 24. “We must guarantee by the end of the year... that Ukraine, as UEFA’s partner, will guarantee the full financing of all the key projects and infrastructure. This is about one billion hryvnias ($125 million),” he said.

Ukraine is due to co-host the finals with Poland but has been constantly criticized by UEFA for sluggish preparations. UEFA will decide on Dec. 11 at its executive committee meeting whether Ukraine’s cities can host matches.

Work by Ukraine’s government has been stymied while the political elite prepares for the first presidential election since the 2004 “Orange Revolution”.

UEFA confirmed in May the four Polish cities – Warsaw, Poznan, Wroclaw and Gdansk – to host matches but said of the proposed venues in Ukraine only Kyiv would be ready and even then it was not guaranteed to stage the final. Ukrainian cities Lviv, Donetsk and Kharkiv had to prove they could be ready by UEFA’s December meeting while Warsaw could yet hold the final if Kyiv’s preparations do not improve.


Polish billionaire buys Ukrainian gas producer

(Reuters) – Kulczyk Oil Ventures, controlled by Polish billionaire Jan Kulczyk, will acquire one of Ukraine’s largest independent gas producers for $45 million, the company said on Nov. 23.

The company said two of its units had signed agreements to buy a 70 percent stake in KUB-Gas from a Californian-based company, Gastek.

It said the acquisition was subject to approval by Ukraine’s anti-monopoly committee and the completion of Kulczyk Oil’s listing on the Warsaw Stock Exchange. The group said KUB-Gas is the sole owner of four gas fields in eastern Ukraine, which contain 8.5 billion cubic feet of proven natural gas reserves and 42,000 barrels of condensate plus probable reserves of 15 billion cubic feet and 80,700 barrels of condensate.

It said the average realized price in the first six months of this year was $5.96 per 1,000 cubic feet of natural gas and $40.92 per barrel. In September alone, the price was $5.97 and $87.15 respectively.


Gazprom, Naftogaz ink gas supply compromise

Russian gas giant Gazprom agreed on Nov. 24 to allow Ukraine to buy less gas than contracted in 2010 and officially agreed to waive fines for reduced purchases in 2009, a development which Reuters said eases the threat of a renewed gas conflict in the New Year.

Ukrainian state energy firm Naftogaz agreed to purchase 33.75 billion cubic meters of gas from Gazprom next year, both companies said in a joint statement. The signed agreement follows a compromise deal brokered last week by Russian Prime Minister Vladimir Putin, and his Ukrainian counterpart, Yulia Tymoshenko.

“These volumes remove the risk of the payment of fines by Naftogaz Ukraine in 2010 for the non-use of contracted gas,” Gazprom Chief Executive Alexei Miller said, according to a Reuters report. Gazprom and Naftogaz also said the agreement confirmed the Russian company's intention not to levy fines on Ukraine for under-consumption of gas in 2009, a promise previously made by Putin to Tymoshenko. Ukraine purchased 18.85 bcm of gas from Russia in the first 10 months of this year, only 59 percent of contracted volumes of 31.7 bcm for the period, a decline in consumption attributable to the global economic crisis, Gazprom said.

“The news is definitely positive for Ukraine, significantly reducing the risk of a new gas conflict with Russia in the coming winter,” Kyiv-based investment bank Dragon Capital said in a note to investors. “With next year’s base import volume reduced to 33.75 bcm, Ukraine can import 27-40.5 bcm of gas from Russia in 2010 penalty-free.”


Tymoshenko threatens to take over gas firms

(Reuters) – Ukrainian Prime Minister Yulia Tymoshenko on Nov. 23 threatened to take away business licenses from local private gas suppliers if they fail to pay their bills to state energy firm Naftogaz by the end of December. Tymoshenko said these firms, created in the 1990s and acting essentially as regional intermediaries between Naftogaz and its clients, owe 8 billion hryvnia ($1 billion) to the state energy firm, which itself struggles to pay for Russian gas imports.

"There will be no more private local gas firms because with such indebtedness that we have – almost 8 billion hryvnia – we cannot say that private entities work efficiently," Tymoshenko told regional governors. "The private entities are destructive. If the debts are not repaid by the end of the year, then they will be deprived of licenses (to supply gas) because gas pipeline leases have already run out," she added.

She said a new state body will be created to do the work of the privately-owned local companies. They do not supply gas to clients but collect payments from industrial clients and consumers and pass it on to Naftogaz, minus costs. Tymoshenko said a government decree to this effect will be signed within days.

Tymoshenko is a front-runner in a presidential election on Jan. 17. President Victor Yushchenko – her former ally during the 2004 Orange Revolution turned rival – is not expected to win re-election with popularity ratings in the single digits. Ahead in opinion polls is Victor Yanukovych, former prime minister and main loser of the 2004 revolution, who gleans his support from eastern industrial Ukraine. Tymoshenko said the majority of the debtors to Naftogaz are found in eastern Ukraine and owned by Yanukovych supporters.

Ukraine’s government and Naftogaz itself has said debts of local gas suppliers make Naftogaz’ monthly payments for Russian gas difficult. So far this year however all its payments have been made on time. A row between Russia and Ukraine over Naftogaz’ debts and the price for gas last winter led to a three-week standoff in January and supply cuts to European countries.


Ukrainian bond payment eases market jitters

LONDON (Reuters) – Ukraine made a $32.9 million coupon payment on a $1 billion sovereign Eurobond due 2016 on Nov. 23, bank analysts said, calming fresh concerns on whether Ukraine and its state-owned firms will service their debts.

“They paid the coupon,” said Luis Costa, emerging debt strategist at Commerzbank. “When it comes to Ukrainian debt, it still looks reasonably straightforward as long as Ukraine has continued IMF support. The problem is more how Ukraine is going to deal with bilateral debt of state-owned entities.”

Another bank analyst, who declined to be named, also said the coupon payment had been made on the sovereign Eurobond.

Central and western European stocks and currencies fell on Nov. 20 on jitters about the debt of Ukraine’s state railway company, which said earlier this month it was looking to restructure a $550 million syndicated loan after failing to repay a portion of it. Fears also loom about Ukraine’s financial stability after the International Monetary Fund suspended its $16.4 billion standby program for Ukraine until after presidential elections in January.

State energy firm Naftogaz restructured $1.6 billion in Eurobond and bank debt earlier this year.

“It just highlights the extent of uncertainty in Ukraine debt in any shape or form,” said Zsolt Papp, chief economist, emerging Europe, at KBC. “The conclusion is – stay away from Ukraine. Ukraine remains a basket case.”