Gas Pipeline and effects to Ukraine

[kievstar]

Russian government sources said on Sunday that the new gas deal would eliminate all intermediaries.

UKRAINE PAYING LESS THAN IT SEEMS?

Analysts say that Russia may well have agreed, behind closed doors, to sell Ukraine gas at much less than the average European market price this year -- but still more than the $201 per tcm Kiev had said it was willing to pay.

"I doubt that it is realistic to expect Ukraine to pay a price higher than $250 per tcm. We do not want to be back (in a row) in March or April, if Ukraine falls into debt," said Jonathan Stern of the Oxford Institute for Energy Supplies.

Ukraine's economy is forecast to contract by up to 5 percent this year, and there could be another disruption in gas supplies if Ukraine is unable to pay its bills.

"Ukraine will pay more this year, but not that much more. I think they settled for something like $210 (per tcm) ... Russia made a big price concession," added analyst Valery Nesterov at Moscow brokerage Troika Dialog.

[kievstar]

Under the deal, the transit fees Ukraine charges Russia will be frozen at $1.70 per million cubic metres per 100 km this year, but this will go up to market prices next year. A Russian government source reckoned this would mean a doubling.

Gazprom said it sent around 120 billion cubic metres of gas to Europe via Ukraine last year. Assuming an average distance of 1,000 km, this would mean it paid around $2.04 billion in fees.

"Gazprom got a good deal... Ukraine won't be getting this higher transit fee until 2010, which for Gazprom will be offset because by then Ukraine is going to be paying a market price," said Chris Weafer, chief strategist at UralSib.

But with market prices falling -- gas follows oil with a time lag of six months -- next year's price for Ukraine and the market-adjusted transit fee could both be low, making it hard to predict a winner.

"What's going to happen if Ukraine falls into arrears, which is very likely? Without the intervention of a financial guarantor, it does look like this is still a patchwork solution," Weafer added.

[BC]

kievstar,

Might want to add the links to future posts.

I believe your posts were from : http://www.guardian.co.uk/business/feedarticle/8280926

[OlgaH]

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.

14.01.2009
Timoshenko: "Ukraine is not supplied with enough gas for its own needs".

[OlgaH]

MOSCOW, Jan 18 (Reuters) -

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,

PARIS, Jan 17 (Reuters)

 Gazprom said on Friday it would sell the technical gas to the European consortium at market price: about $450 per 1,000 cubic metres.

GDF Suez's statement said the European companies were "ready to finalise an agreement" with Gazprom over the course of this weekend.

[OlgaH]

kievstar,

Might want to add the links to future posts.

I believe your posts were from : http://www.guardian.co.uk/business/feedarticle/8280926

"Current prices paid by European countries for Russian gas range between $240 and $300 per tcm, according to Ukrainian President Viktor Yushchenko".   

[BC]

"Current prices paid by European countries for Russian gas range between $240 and $300 per tcm, according to Ukrainian President Viktor Yushchenko".   

touché

[Misha]

14.01.2009
Timoshenko: "Ukraine is not supplied with enough gas for its own needs".

Olga, always snipping quotes here and there to support your point of view. Yes, Ukraine does not have enough gas for its own needs, but that does not mean it can't stockpile enough gas to meet short term demands 

[Misha]

"Current prices paid by European countries for Russian gas range between $240 and $300 per tcm, according to Ukrainian President Viktor Yushchenko".   

And, is GAZPROM's Miller that you continually cite along with other Russian officials a better source  The reality is that the price of gas sold to Europe is based on a formula that is fixed to the price of crude oil. There is a 6-9 month lag before new prices are fixed. Since the price of crude went down, the price of gas will follow.

[OlgaH]

And, is GAZPROM's Miller that you continually cite along with other Russian officials a better source 

Jan. 2, 2009
Gazprom charges European countries an average $500 per 1000 cubic meters, according to a report in The Wall Street Journal. 

[kievstar]

People should be careful of what you think the agreement is - you will look bad tomorrow.  People in Ukraine will be happy.  Putin and Yulia's live press release last night showed a side I never seen Putin have on TV - fear.  Yulia did not look good either.  Personally I like Putin a lot but he failed on this.  I wonder why no mention of stolen gas today from Putin?  But technical gas needs to be resolved and allegations of stolen gas.   I think Putin has "jumped the shark"  - to bad he had a nice run. But even George Bush at one time had the highest approval rating of any USA President in history.

The price is not market.   http://www.nytimes.com/2009/01/19/world/europe/19gazprom.html?_r=2&hp -

Since several people work for maybe Gazprom on this board here is some words from Gazprom (notice this is not $450 or $250):

These customers, such as the German utility E.On or GDF in France, are expected to pay an average of between $260 and $300 for 1,000 cubic meters of natural gas in 2009, according to estimates by Gazprom. Thus, under the agreement, Ukraine would pay between $208 and $240 for natural gas.

[kievstar]

But people should be aware contract is not signed by anyone.  No talk about technical gas or stolen gas.  Tomorrow Russia could look for a loop hole or new allegation to get out of deal.  Looks like two women got the best of Putin (one in Germany and one in Ukraine).   

[OlgaH]

Yes, Ukraine does not have enough gas for its own needs, but that does not mean it can't stockpile enough gas to meet short term demands 

9 Jan 2009
No hot water in Zhitomir, Yalta, Sevastopol. Lvov says also will turn the hot water off

Стоит отметить, что из-за нехватки газа горячую воду отключили в Житомире, Севастополе, Ялте. Власти Львова также заявили, что в целях экономии намерены отключить жилой фонд от горячей воды.
http://for-ua.com/ukraine/2009/01/09/154120.html

Jan 2009 The Odessa Port Chemical Plant (OPZ), said it had completely stopped production due to reduced gas supplies.
Naftogaz asked chemical producers to cut gas consumption by 50 percent.
http://for-ua.com/ukraine/2009/01/09/094055.html
  

[OlgaH]

The price is not market.   http://www.nytimes.com/2009/01/19/world/europe/19gazprom.html?_r=2&hp -

From nytimes.com:
These customers, such as the German utility E.On or GDF in France, are expected to pay an average of between $260 and $300 for 1,000 cubic meters of natural gas in 2009, according to estimates by Gazprom.

Russian president Medvedev said at the international gas conference in Moscow that the gas price for Europe will be reduced 2-2,5 as little during 2009
http://www.rian.ru/gas_news/20090117/159492422.html

Таким образом, Украина может закупить газ у России в 2009 году по европейской цене минус 20%. Цена на газ в первом квартале 2009 года для стран, сопредельных с Украиной, составляет $470 (in the first quarter of 2009) за одну тысячу кубометров.
http://www.segodnya.ua/news/13055009.html

[Misha]

Jan. 2, 2009
Gazprom charges European countries an average $500 per 1000 cubic meters, according to a report in The Wall Street Journal. 

Again, based on the price of oil at the time that the last contract was signed. The price will be a lot lower when the next contract will be signed. What exactly do you no understand about the concept that the price of natural gas is indexed to the price of crude oil?

[BC]

Again, based on the price of oil at the time that the last contract was signed. The price will be a lot lower when the next contract will be signed. What exactly do you no understand about the concept that the price of natural gas is indexed to the price of crude oil?

Misha,

The price is not fixed per se in the contract.. the contract refers to the pricing scheme.

Yes, prices will likely go down, same as it was up.

What is actually happening is a weaning of UA from the RU teat.. more a matter of principle than price.

[OlgaH]

Looks like two women got the best of Putin (one in Germany and one in Ukraine).   

Thankfully to Putin Timoshenko showed  Ukrainians that she can handle the negotiation with Russia   and by that again has trod on Yuschenko's pet corn before new election   (again thanks Vladimir Vladimirovich   )    

17/01/2009
BERLIN - Following a meeting in the German capital Berlin, Russian Prime Minister Vladimir Putin and German Chancellor Angela Merkel said they were optimistic about reaching an agreement concerning the delivery of gas to Europe via Ukraine.

One of the issues discussed was Mr Putin's proposal   that European countries form a consortium which would pay for the extra costs of delivering through Ukrainian territory.
http://www.expatica.com/de/news/local_news/Putin-and-Merkel-optimister-over-gas-accord_48743.html

Timoshenko blames Yuschenko in gas crisis
http://gazeta.ua/index.php?id=277692&lang=ru

Yuschenko blames Timoshenko
http://tsn.ua/ru/ukrayina/yushchenko-obvinyaet-timoshenko-v-gazovom-zagovore-s-moskvoi.html

Czech  Republic  blames Yuschenko and Timoshenko in gas crisis  
http://lugansk.proua.com/news/2009/01/12/111140.html

[OlgaH]

Again, based on the price of oil at the time that the last contract was signed. The price will be a lot lower when the next contract will be signed. What exactly do you no understand about the concept that the price of natural gas is indexed to the price of crude oil?

Misha I already gave you the link 

Russian president Medvedev said at the international gas conference in Moscow that the gas price for Europe will be reduced 2-2,5 as little during 2009
http://www.rian.ru/gas_news/20090117/159492422.html

[Misha]

Yes, prices will likely go down, same as it was up.

What is actually happening is a weaning of UA from the RU teat.. more a matter of principle than price.

Well, it will take a few years and tens of billions of dollars that GAZPROM does not have to wean itself from Ukraine's "teat" as pipelines aren't built overnight. It will be that much harder for GAZPROM to finance the construction of pipelines when prices are going down and it is already heavily indebted.

[OlgaH]

Russia, Ukraine sign contract on gas supplies for 2009-2019

MOSCOW, January 19 (RIA Novosti) - Russian energy giant Gazprom and Ukrainian energy company Naftogaz signed on Monday a contract on Russian gas supplies to Ukraine for 2009-2019.

Russian Prime Minister Vladimir Putin said Moscow and Kiev had reached agreement on all issues of gas transit and supplies.

He added that there would be no intermediaries in Russian-Ukrainian gas relations.

Putin said Gazprom had been ordered to restart full natural gas transit to Europe via Ukraine.

Putin and his Ukrainian counterpart, Yulia Tymoshenko, agreed Sunday in Moscow on a gas price for Ukraine for 2009 and gas transit tariffs. The deal would see Kiev paying 20% less than the European market price, expected to be around $450 per 1,000 cubic meters in the first quarter.
http://en.rian.ru/world/20090119/119702631.html

[BC]

He added that there would be no intermediaries in Russian-Ukrainian gas relations.

Sounds like the 'intermediaries' were a big part of the problem in the first place.

[OlgaH]

Sounds like the 'intermediaries' were a big part of the problem in the first place.

May be he is talking about RosUkrEnergo 

[kievstar]

Looks like everybody is happy - but I would really like to know why no talk about technical gas or stolen gas. 

[Shadow]

Looks like everybody is happy - but I would really like to know why no talk about technical gas or stolen gas. 

The EU partners have agreed to pay for it. 

[BC]

May be he is talking about RosUkrEnergo 

RosUkrEnergo is a Swiss-registered venture company that transports natural gas from Turkmenistan to East European countries. 50 percent of the company is owned by Gazprom, through its daughter Swiss-registered Rosgas Holding A.G., and another 50 percent by Swiss-registered Centragas Holding A.G., acting on behalf of a consortium of Ukrainian businessmen (who have refused to name themselves) [1] [2] [3] Dmitriy Firtash (45%) and Ivan Fursin (5%).[4] RosUkrEnergo is owned by a business ally of Viktor Yushchenko.[5]

http://en.wikipedia.org/wiki/RosUkrEnergo

They say that everything is more clear in the rear view mirror..

Seems to be the case here too.. explains a lot.