Ukraine might consider granting Russia the right to manage a portion of its gas- and oil-transport network in return for Moscow writing off massive gas debts
of some $1.5 billion per year. In return, Moscow would write off massive gas debts, according to Prime Minister Viktor Yushchenko.
In a vaguely worded statement reported by news agency Interfax‑Ukraine, Yushchenko said Ukraine might provide Russia with one‑third of its fuel‑pipeline network as a “concession” to Russia. He did not explain what role Russia would be entitled to play in the management of Ukraine’s pipelines if given such a concession. Nor did he clarify whether Ukraine would consider granting Moscow partial ownership of its pipelines.
Giving Russia a concession stake in Ukraine’s fuel pipelines was one of several proposals brought up when negotiators from the two sides sat down in Kyiv on July 31 and Aug. 1 to discuss ways to whittle away at the enormous amount of money Ukraine owes its neighbor for gas.
“This is one of the possibilities,” Yushchenko said Aug. 1. “We will undoubtedly look at other proposals.”
Another plan involves Ukraine providing Russia with Tu‑160 and Tu‑95 bombers, long‑range missiles and aircraft equipment, according to Interfax.
Yushchenko and Russian counterpart Mikhail Kasyanov first discussed the framework for the potentially landmark agreement during Yushchenko’s visit to Moscow in mid‑July.
For the negotiations to succeed, the two sides will have to come to some sort of agreement on how much money Ukraine owes Russia in gas debts. Yushchenko and Kasyanov reportedly discussed a mechanism for calculating that figure in Moscow last month, taking into account how much money Ukraine is capable of paying for Russian supplies of natural gas and other fuels.
Russia claims Ukraine’s ever‑growing debt is up to $2 billion, while Ukraine’s latest figures put the debt at about $1.4 billion.
Complicating the issue are recent admissions by Ukrainian leaders that the country has siphoned off billions of dollars worth of Russian gas crossing its territory in the last several years. That has angered Russia’s large energy companies, particularly gas giant Gazprom, which recently accused Ukraine of siphoning off 10.8 billion cubic meters (bcm), or $500 million worth of gas, so far this year.
Gazprom President Rem Vyakirev recently criticized Ukraine for foot dragging and threatened to pump gas to Western Europe by alternative routes if no debt agreement was reached soon.
The negotiations that ended in Kyiv on Aug. 1 were rescheduled from July 26 to July 31 after Vyakirev and Russian Deputy Prime minister Serhiy Khristenko decided at the last minute that their presence in Kyiv for negotiations would be unnecessary.
Ukraine’s gas pipelines transport about 140 billion cubic meters (bcm), or 96 percent, of Russia’s annual gas exports. Although energy experts say it will take years to develop alternate supply routes bypassing Ukraine, few expect Russia to charge its Ukrainian neighbors less than the market rate, which has varied between $40 per 1,000 cubic meter and $60 per 1,000 cubic meter.
Kuchma on July 28 lashed out at a tentative deal initialed by Deputy Prime Minister Yulia Tymoshenko on July 26 for the purchase 20 bcm of Turkmen gas this year, saying Ukraine would have to pay more for Turkmen gas than what it pays for Russian gas. He said he would re‑introduce the Turkmen gas discussion personally with Turkmen President Saparmurat Niyazov when he visits Ashgabat in the fall.
Appearing on national television from Crimea, where he is currently on vacation, Kuchma made it clear that penning international gas contracts is a presidential perogative and that no one else would be the final arbiter of what price Ukraine will pay for fuel.
Tymoshenko defended herself, saying she had only initialed the deal and had not operated outside her authority.
The deputy prime minister later warned local enterprise bosses in Luhansk to expect a rise in the price of gas in the near future.
“The prices Kasyanov and Yushchenko were tossing about in Moscow are so high that I’m afraid to name them,” Tymoshenko said over the weekend.
According to Ukrainian media, over the first six months of 2000, Ukraine consumed officially about 42 bcm of natural gas, of which 33.6 bcm was imported from Russia, or 3.8 bcm more than was planned at the beginning of the year. The country consumed 75.7 bcm of gas last year and imported 57.6 bcm from Russia.
Over the first six months of 2000, Russia provided Ukraine with 20.8 bcm (at $50 per 1,000 cubic meter) of natural gas in transit fees. Of that, 12.8 bcm (at $45 per 1,000 cubic meter) was provided by Itera, a commercial gas trader with close ties to Russia’s Gazprom.
