Gas Pipeline and effects to Ukraine

[55North]

The issue about allowing the gas to flow is one of routing.

http://en.for-ua.com/forum/read.php?10,67729,67729#msg-67729
 
In addition, if Ukraine does not need gas possibly until the end of the heating season, why buy before the inevitable price fall, partly indicated by the oil price falling.  That's home economics. 
 
Of course, they will have a goodwill problem with the EU.  But that may not matter to at least one of the protaganists in the UA power struggle.

[Misha]

Let's not forget that GAZPROM has in the past continually used the Russian state to support its interests. Contracts did not matter much with its dealings with BP, Shell and others. The state always found ways to bully outside interests so GAZPROM could get what it wanted.

[taras bulbas]

Ukraine did not pay the bill in time.
Russia offered a price 50% of the EU market price.
Ukraine did not open serious negotiations about the next year in time.
Russia closed the gas supply.
Ukraine did not transit all gas as they are supposed to do by contracts, 'diverting' amounts to their own resources.
Russia closed the transit.
Ukraine tried to amend a signed agreement in their favour.
Russia requested signing the agreement without additions.
Ukraine did not open the transit lines after re-signing the agreement.
Russia did open the transit lines
Ukraine did not admit the agreed spectators to their stations.
Russia decided Ukraine has no rights for a discount on the market price.

Of course Ukraine has no blame in this, and it is Russia who is not treating them nice. 

Wow! You should work for Pervi Kanal, that bastian of independent reporting!

[wxman]

I think the EU and Russia should be more concerned with what's happening in the Baltic states than with the gas standoff. It doesn't take long for protests to spread both west and east.
http://www.nytimes.com/2009/01/17/world/europe/17lithuania.html?ref=worldbusiness

[kievstar]

I have read the contract that is in English and payment terms are not specific on when Ukraine is liable for payment.  Not really binding and there are several versions of it.  But you two should read it and not listen to the Russian or Ukraine newspapers or media.

Olga H, It is well known Putin has a crush on Yulia why does he like late night meetings with her.  Putin likes to go fishing with his shirt off and hunt tigers you know.  I am joking of course.  But I am sure you are aware of the numerous rumors and jokes about Putin and Yulia over the past 4 years and there numerous late night meetings.  

I work for a company which currently has banks in Netherlands, Germany, Italy, Belgium, and France more than 120 days past due on there bills which had 30 days to pay upon receipt of the goods to my company I work for (so 150 days plus since they took legal ownership of product).  The products they are late on allows more than 10 million people  in the EU to have access to there money in banks, do electronic banking, paying bills, etc.  Should my company turn of these customers capability (we could do this in 12 hours) and put the EU in another panic since big banks in Europe can not pay their bills.  Of course not.  We do not want to disrupt the customers of our customers. We are  taking legal action with some banks, making some banks prepay on future goods, and maybe getting % of ownership of other banks. Point is Russia handled this bad and there responsible for the EU customers.  Russia failed the final customer but not delivering what they promised.  In business if you make the sale but your freight forwarder does not do its job you find another freight forwarder.  But you do this so you do not disrupt your customers.  You do not turn off gas until you have a means to deliver to the customer.

Russia disrupted their customers. Russia failed big time.  Final customer does not want to hear the Russia is being held hostage by Ukraine.  Grow up Russia and get it done.  Pay the extra money and buy gas from someone else to deliver and do not use Ukraine.
  

[OlgaH]

I have read the contract that is in English and payment terms are not specific on when Ukraine is liable for payment.  Not really binding and there are several versions of it.  But you two should read it and not listen to the Russian or Ukraine newspapers or media.

Olga H, It is well known Putin has a crush on Yulia why does he like late night meetings with her.  Putin likes to go fishing with his shirt off and hunt tigers you know.  I am joking of course.  But I am sure you are aware of the numerous rumors and jokes about Putin and Yulia over the past 4 years and there numerous late night meetings.  

Would you be so kind to provide us with the link to the contract.

kievstar, sorry but I'm not interested in the yellow press, "bed" gossips and rumors.

[OlgaH]

Russia disrupted their customers. Russia failed big time.  Final customer does not want to hear the Russia is being held hostage by Ukraine.  Grow up Russia and get it done.  Pay the extra money and buy gas from someone else to deliver and do not use Ukraine.
  

kievstar, Russia has its own gas and has several contracts with another countries buying additional gas for delivering. If Ukraine doesn't want to buy Russian gas Ukraine is free to make the contracts with other countries.  But Turkmenistan already refused Ukraine in gas.

About disrupting the customers 

Merkel as she said is in favor of quick progress on the construction of the Nord Stream Baltic Sea gas pipeline. 

January 16, 2009
Merkel:
"We want it to be built quickly. We have an approvals process to complete. Politically, there is a commitment by the German government to this project"

“The Creation of the South Stream pipeline project remains one of the priorities. I think Europe has realised the need for setting up alternative routes to deliver gas from Russia,” ENI CEO Paolo Scaroni stated.

But South Stream competes with Nabucco – a pipeline backed by the U.S. and the EU that is intended to bring Caspian Sea gas to Europe via Turkey, by-pass Russia.

In theory it should carry gas from Turkmenistan – but most of this is already contracted to Russia and China. Another possible source for Nabucco gas – Azerbaijan – is also in talks with Russia.

28.07.2008
Gazprom and Turkmenistan signed an agreement on principles of the Turkmen natural gas price formation during a visit of a Gazprom delegation led by CEO Alexei Miller, the company said on Friday. Miller had a meeting with Turkmen President Gurbanguly Berdimuhamedow, Prime Tass said.

The presidents of Russia, Kazakhstan and Turkmenistan signed a joint declaration on the construction of the Pre-Caspian Gas Pipeline in May 2007.

September 03, 2008
Russia and Uzbekistan agreed Tuesday to build a new natural gas pipeline through Uzbekistan to export Turkmen and Uzbek natural gas, said news reaching Almaty Tuesday from Tashkent, the Uzbek capital.

[Mir]

Reality check for Putin lovers:

MOSCOW (AP) _ Gazprom, which just a year ago was vowing to become the world's biggest company, is sinking fast as the global meltdown hits hard and the Kremlin uses it as a pawn in its geopolitical battles _ most recently in the gas dispute with Ukraine.

The state-backed gas export monopoly is bleeding an estimated $140 million a day in the energy war with Kiev. Experts say the company is being forced to sacrifice its interests to the government's political aims, threatening its profitability as it teeters under huge debt.

As the spat between Russia and Ukraine moves into its third week, Gazprom's ambition to become the world's largest company by market capitalization by 2014 seems a mirage. The company's share price has plunged 70 percent since last January, sending it tumbling from the No. 3 spot among the world's biggest companies to 35th.

Since Russia shut off gas supplies to Ukraine on Jan. 1 and to Europe six days later, Gazprom has lost $1.1 billion in export revenue, Gazprom chief Alexei Miller said Wednesday.

Losing foreign income is catastrophic for Gazprom: It exports a third of its production and reaps much higher profits abroad than at home, where prices are capped. Saddled with net debt of roughly $45 billion, the protracted dispute with Ukraine is one Gazprom can ill afford. And considering the company's central importance to Russia's prosperity, its mounting woes may hold the key out of the deadlock with Ukraine _ which is also losing millions a day in the pipeline freeze.

Analysts estimate that the gas giant, which is Russia's biggest debtor, will have to repay $7 billion this year _ easy enough when gas is flowing and prices remain at record highs. But since oil prices have plummeted, gas prices will follow suit _ with a lag of six to nine months.

Gazprom's changing fortunes coincide with Russia's bleakest economic period in a decade. The country is facing recession, industry has been ravaged by falling demand for metals, and investors suspect the government will turn to state-controlled giants such as Gazprom to prop up the ailing economy.

"The company is spending like crazy to do the state's bidding, to keep growth up," said James Fenkner, director at Moscow-based Red Star Asset Management. "They are completely unprepared for low oil prices."

The Kremlin has often used Gazprom as a tool to implement its own, sometimes controversial policies. Seeking a bigger slice of Russia's energy industry, the Kremlin embarked on a renationalization program under Vladimir Putin's presidency that saw Yukos oil company's assets controversially fall into the hands of Gazprom and state oil major Rosneft.

Gazprom paid $13 billion to buy Sibneft oil company from billionaire Roman Abramovich in 2005, and a year later forced Shell to cede its controlling stake in the Sakhalin II project in Russia's Far East for $7.5 billion.

Gazprom also plans to exercise an option to buy 20 percent of Gazprom Neft, formerly Sibneft, from Italy's Eni for $4.5 billion by April. Now Russia's energy giants are facing a mountain of debt, raising questions over their ability to boost spending and invest in new and existing fields.

Gazprom has earmarked capital expenditure of 700 billion rubles ($22.4 billion) for 2009, some of which will go toward new pipelines and costly exploration in remote Arctic regions.

But Gazprom has also taken on extravagant vanity projects. It is building gargantuan headquarters in St. Petersburg and is one of the key investors in the 2014 Winter Olympics to be held in Sochi _ already besieged by cost overruns and delays.

It also faces costly commitments to upgrade power generating assets it snapped up during the state electricity monopoly's privatization, while banking arm Gazprombank has been burdened by the government's recent efforts to aid a troubled banking sector.

Fenkner claims Gazprom is spending eight times more than the last time oil languished at $40 a barrel. "They are still spending money," said Fenkner. "They are doing all this stupid, stupid stuff."

And it is Gazprom that seems destined to suffer most as Moscow and Kiev pursue a game of political brinkmanship over gas supplies to Europe. While new projects such as Nord Stream will provide additional capacity for Russian gas, experts expect Europe to redouble efforts to back bypass routes from Central Asia, build more pipelines from North Africa and seek to expand more costly LNG imports.

"Gazprom has shown itself an unreliable partner to Europe," said Alexander Rahr of the German Council on Foreign Relations in Berlin. "I don't think the European Union will distance itself from Russia ... we need Russian gas, but I don't think (Europe) will enhance imports from Russia ... Russia is more dependent on us than we are on Russia."

[OlgaH]

The prime ministers of Bulgaria, Slovakia and Moldova saw for themselves that Ukraine blocks Russian gas transit to Europe

Wednesday, January 14, 2009 12:09 PM

The prime ministers of Bulgaria, Slovakia and Moldova saw for themselves that Ukraine blocks Russian gas transit to Europe

Today Gazprom CEO Alexei Miller held a working meeting in the company's headquarters with Prime Minster of Bulgaria Sergei Stanishev, Prime Minster of Slovakia Robert Fico and Prime Minister of Moldova Zinaida Greceanii.

Participants in the meeting discussed the critical situation, which developed because of the Ukrainian refusal to transit Russian gas to Europe.

They visited the Central Dispatch Department where Alexei Miller demonstrated on the dispatching screen to Sergei Stanishev, Robert Fico and Zinaida Greceanii the real situation with the gas transit through Ukraine.

The meeting in the Central Dispatch Department was held with the participation of monitors and members of the commission for the monitoring of gas transit through the territory of Ukraine.

"We began to pump gas yesterday morning towards the Balkans, which are experiencing the most acute fuel shortage. However Ukraine did not take in the gas and continues to block our gas from its transportation system. The Ukrainian side has not given any comprehensible explanations of their refusals to our demands that they open the Western taps. As you can see on the dispatch screen the gas transportation system is open on our side, is maintaining operating pressure and is ready to begin pumping gas to Europe at any minute through GIS Sundzha. However zero volumes of gas are going to Ukraine, as the gas still encounters the closed Ukrainian tap. 

Today, during our meeting we discussed possible steps to resolve the crisis. In particular, the Slovak prime minister proposed a major swap transaction.

It means Gazprom would supply gas to Ukraine for its internal needs in the amount of 20 million cubic meters per day, which is the amount necessary for Slovakia, while Ukraine, which has its underground storages located at the border with Slovakia, would supply the same amount of gas to Slovak consumers.   

Gazprom agrees to such a swap. Ukraine has to open the tap on its territory for that. Now it’s up to Ukraine.

We have also agreed to consider how to implement a similar scheme for Moldova.

Unfortunately, it is impossible to make swap transactions with Bulgaria, as Ukraine has no underground gas storages in that direction," Alexei Miller said.

At the end of the meeting the parties agreed that the current crisis with gas transit via Ukraine must end immediately and there are no objective reasons to delay the re-start of transit. 

Sergei Stanishev, Robert Fico and Zinaida Greceanii stressed the necessity to diversify the supply routes for Russian gas to Europe to avoid transit risks, and thus the construction of direct pipelines, such as South Stream the Black Sea bed, becomes specifically important.

Ukraine again refuses to secure Russian gas transit to Europe
Saturday, January 17, 2009 10:01 AM

Today at 2.00 Moscow time Gazprom sent another request to the Naftogaz Ukrainy United Dispatching Center (ODU) for the transit of 99.2 million cubic meters of gas a day starting from 10.00 via the Sudja gas metering station. From this amount, 13.9 million cubic meters is intended for customers in Moldavia, 63.1 million cubic meters is meant for the Balkans via the Orlovka gas metering station and 22.2 million cubic meters is destined for consumers in Slovakia via the Uzhgorod gas metering station.

The Ukrainian answer was again negative.

[Simoni]

Let's not forget that GAZPROM has in the past continually used the Russian state to support its interests. Contracts did not matter much with its dealings with BP, Shell and others. The state always found ways to bully outside interests so GAZPROM could get what it wanted.

I hate bullies,and hope this one gets a bloody nose.  GAZPROM is a corrupt company that makes Scrooge look like a boy scout.

[Simoni]

Wow! You should work for Pervi Kanal, that bastian of independent reporting!

I was thinking the same!  That propaganda post from Shadow read's like a GAZPROM press release!

[Mir]

Even Georgia, who has a grudge against Russia still receives the gas according to the contract with no problem   Why? They just don't mix politics with commerce, or may be because they are not a transit country.

And you call banning the import of Georgian wine and the invasion of the country by Russian army as no mix of commerce with politics? Or is it that only Russia has the right to mix commerce with politics?
BTW are you aware that a pipeline to transport Azeri oil to Europe bypassing Russia has been built through Georgia? Does that make you any wiser as to why Russia attacked Georgia?

[BC]

Even Georgia, who has a grudge against Russia still receives the gas according to the contract with no problem   Why? They just don't mix politics with commerce, or may be because they are not a transit country.

And you call banning the import of Georgian wine and the invasion of the country by Russian army as no mix of commerce with politics? Or is it that only Russia has the right to mix commerce with politics?
BTW are you aware that a pipeline to transport Azeri oil to Europe bypassing Russia has been built through Georgia? Does that make you any wiser as to why Russia attacked Georgia?

Isn't there a huge thread going on elsewhere about the ex Georgian crisis?  I'm not going to even begin addressing this as I would just be repeating..

[OlgaH]

GAZPROM is a corrupt company that makes Scrooge look like a boy scout.

and in spite of everything Gazprom makes new contracts and projects with FSU countries and Europe 

[OlgaH]

And you call banning the import of Georgian wine... as no mix of commerce with politics?

Georgia must resolve their problem with wine falsification and observe the sanitary rules 

Agree with BC about the ex Georgian crisis.

[OlgaH]

BTW are you aware that a pipeline to transport Azeri oil to Europe bypassing Russia has been built through Georgia? Does that make you any wiser as to why Russia attacked Georgia?

The Ministry of Defence of RF and the Ministry of Defence of Azerbaijan ratified a plan of cooperation for 2009.  Does that make you any wiser   

http://www.day.az/news/politics/142093.html

[Makkin]

     72 hrs tops


  Makkin

[Makkin]

Mir,



      Ermmm....


    For information you request is possible and all that you wish?


    Your apologies are sufficient and those who speak for you.  Write to those that "I trust".


  You can accompish three-fold if you have faith.





     Makkin

[55North]

The deal is done.

2 future Presidents agree.  They might as well get used to each other.  Their continued interdependence is assured as their economies hit the skids.

http://news.bbc.co.uk/1/hi/world/europe/7834796.stm
 
http://edition.cnn.com/2009/WORLD/europe/01/17/gas.ukraine.russia.talks/index.html

[OlgaH]

Europe gas crisis prompts jokes in Russia, Ukraine
http://news.yahoo.com/s/afp/20090116/ts_afp/russiaukraineeuenergygashumouroffbeat

-- News from March 6, 2009: Gazprom has offered to sell Ukraine gas for 3,500 dollars per 1,000 cubic metres. The management of Ukraine's Naftogaz says the optimal price is 50 dollars. The talks are continuing.

-- They say Naftogaz will lodge a complaint against Russia with the Stockholm Tribunal.

- So will Russia be put against the wall?

- Unlikely. Ukraine, as always, will refuse to pay for the bullet.
________________________________________________________________

-- Russian Prime Minister Vladimir Putin and Belarussian President Alexander Lukashenko are roasting Ukrainian President Viktor Yushchenko on a skewer.

Lukashenko asks: "Vladimir Vladimirovich, why are you turning the skewer so quickly? He won't be cooked well enough."

Putin: "Hmmm. When I rotate it slowly, he steals the coal."
______________________________________________________________________

-- It's New Year's Eve -- the day before the expected cutoff of Russian gas supplies to Ukraine after talks between Moscow and Kiev collapse. A Ukrainian anchorman announces:

Dear television viewers and radio listeners! We kindly ask you to put away any heavy and cutting objects which can harm your television and radio sets: we are beginning the broadcast of the President's New Year's address to the nation.
____________________________________________________________________

-- A plane carrying Ukrainian President Viktor Yushchenko, Ukrainian Prime Minister Yulia Tymoshenko and pro-Russian opposition politician Viktor Yanukovych is flying over Ukrainian territory.

Yushchenko: I will now drop hope for the future on all Ukrainians and will become the most respected man in the country.

Tymoshenko: And I will drop a promise to pay each client of the savings bank an additional thousand hryvnias and will earn even more respect.

Yanukovych: And I will throw the two of you overboard and a monument to me will be erected in my lifetime.
__________________________________________________________________________ ____

-- Tymoshenko honestly warned Ukrainians that they will have a very difficult year in 2009, as well as 2010 and the next 40 years until she leads the people of Ukraine out of the crisis!

[BC]

The deal is done.

2 future Presidents agree.  They might as well get used to each other.  Their continued interdependence is assured as their economies hit the skids.

http://news.bbc.co.uk/1/hi/world/europe/7834796.stm
 
http://edition.cnn.com/2009/WORLD/europe/01/17/gas.ukraine.russia.talks/index.html

Yep, add this one too.. http://edition.cnn.com/2009/WORLD/europe/01/18/gas.ukraine.russia.talks/index.html

Is very interesting the way this was managed.. with the 'de facto' rulers of RU and UA settling the matter in private, well into wee hours of the morning after futile meetings with officials from all over the world all day long.

They will both come out smelling like roses.

Karate politics works again.. These two were just practicing and choreographed a beautiful performance with the world kept on edge...  The stone they threw killed not only one bird, but maybe even three.

Two bordering countries back under control within one year with minimal loss of life.. a huge accomplishment.

Looking forward to an encore with Obama stepping up to the stage.

[kievstar]

Deal is not done.  Nothing is signed.  Documents are being prepared.  The basis on the 20% discount is not detailed so EU Brussels has told them to make a very detailed contract so we do not have a 2008 contract.  EU officials who are in Brussels say based on the forecast for 2009 looks like Ukraine is going to pay 210 for gas which is more than 179 but less than 250 offered by Russia.  1st quarter of 2009 Ukraine will pay a higher number as gas will come down through the year. 

[Misha]

1st quarter of 2009 Ukraine will pay a higher number as gas will come down through the year. 

Doesn't Ukraine have enough gas stockpiled until April? So, they can use their stored gas until then, and then start burning and stockpiling gas once market prices haves dropped down to $210 or less.

[OlgaH]

Deal is not done.  Nothing is signed.  Documents are being prepared.  The basis on the 20% discount is not detailed so EU Brussels has told them to make a very detailed contract so we do not have a 2008 contract.  EU officials who are in Brussels say based on the forecast for 2009 looks like Ukraine is going to pay 210 for gas which is more than 179 but less than 250 offered by Russia.  1st quarter of 2009 Ukraine will pay a higher number as gas will come down through the year. 

The first quarter of 2009 the price for Eastern Europe is about $470 per 1,000 cu m, the Russian energy giant Gazprom said.
http://rian.com.ua/economy/20090118/78085661.html

Then the price will be reduced for Europe as Medvedev said.

Plus Europe will pay for technical gas   So no more freebie for Ukraine regrading technical gas and Gazprom has avoided one of headaches with Ukraine  

[kievstar]

Olga H, please read and if you want fly to Brussels this week and you and Shadow can talk directly to someone who deals with these contracts.  You also need to back of transit fees.  You and Shadow most work in investor relations department for Gazprom. 

MOSCOW, Jan 18 (Reuters) - Who pays and who profits from Sunday's apparent agreement on a new gas relationship between Russia and Ukraine?


In a normal, commercial world, it should be easy enough to work out. But the complex, opaque nature of the two nations' gas dealings and the lack of full detail about the outline agreement makes it very hard to be certain what is really happening.

Russian Prime Minister Vladimir Putin said Moscow had agreed to sell Kiev gas this year at European prices less a 20 percent discount for 2009, moving to full European prices in 2010.

In return, Kiev would charge Russia the same amount as last year for the transport of export gas across its territory to Europe. This fee would increase to a "market level" next year.

However, neither the "European prices" for gas nor the "market level" for the transit fee have been publicly defined.

Kiev paid $179.50 per 1,000 cubic metres (tcm) for Russian gas last year. Current prices paid by European countries for Russian gas range between $240 and $300 per tcm,