Gas Pipeline and effects to Ukraine

[OlgaH]

Volodymyr Omelchenko, an analyst with the Razumkov Center of Sociological Studies in Kiev, said RosUkrEnergo helps finance the political organization of Tymoshenko's bitter rival, Ukrainian President Viktor Yushchenko.

Yushchenko, however, has denied rumors that he has ties to the gas business.

[55North]

.....and no doubt, some of the earnings from the Gazprom half of RosUkrEnrgo, if not fromGazprom itself, were used to subsidise the expenses of United Russia.
 
That's why it exists!

[BC]

.....and no doubt, some of the earnings from the Gazprom half of RosUkrEnrgo, if not fromGazprom itself, were used to subsidise the expenses of United Russia.
 
That's why it exists!

I think this strengthens Putin's position.. or?

This company lived to profit from old RU pricing and reselling to the west at a huge profit. - now it's gone.

If there were interests, why would Putin push to get rid of this intermediary?

[OlgaH]

Dmitri Firtash (holds 45% of RosUkrEnergo) and Yuschenko's wife has a joint bank account.

http://news.finance.ua/ru/~/1/2008/04/14/124164

Dmitri Firtash also controls 75% of oblgas Ukraini (almost 50 billion cub m of gas per annum)

http://www.segodnya.ua/news/13053249.html

[kievstar]

Gazprom owns 50% of Belarus pipelines (per Gazprom) that is why they do not dispute and Belarus gets low gas price.  Probably will change when Gazprom has 100% ownership. 

What is interesting Yulia has business connections with Gazprom executives dating back to 1990's.  Yuschenko wanted to get rid of intermediary - probably since he has made enough money from this venture and more lucrative deals out there..  Yuschenko makes money other ways and it is not really in gas as he owns more than 100 apartments he rents.  Consulting firms and construction firms pay him bribes to get government business. 

The big thing now is the additional 10% on foreign cars effective January 1st as too many people like myself were buying BMW's in USA and selling in Ukraine and nobody wanted former Soviet Union cars.  But most of the domestic car manufacturing is owned by close politicians of guess who?  10% tax plus drop in Ukraine dollar makes this a very good business.  Plus I am sure he picked up more apartments and ownership of local businesses as the whole country was distracted by the gas issue. 

I have always like Yankovich (spelling) - he is very corrupt but he is not very smart so it is better for a country to have a stupid president rather than a clever one.

 

[Misha]

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

Olga, just for you. This from a Russian source citing both GAZPROM and Medvedev:

Цена поставок

Итак, 360 долларов за тысячу кубометров. Для Украины всего несколько недель назад эта цена была немыслимой. По подсчетам журнала Smart Money, при стоимости газа в 250 долларов Киеву пришлось бы заплатить Москве более трети доходной части бюджета Украины на 2009 год - 13 миллиардов долларов. Если бы с января 2009 года газ для Украины подорожал до 400 долларов за тысячу кубометров, то импорт 55 миллиардов кубометров газа обошелся бы Украине более чем в два раза дороже по сравнению с 9,9 миллиардами долларов, которые страна заплатила в 2008 году. Почему же отказавшись от цены в 250 долларов, Тимошенко неожиданно согласилась на 360 долларов?

Теперь цена на газ для Украины формируется исходя из цены на топливо для потребителей в ЕС, которая высчитывается по формуле, привязанной к ценам на нефтепродукты с задержкой в полгода. Сейчас цена на нефть колеблется в районе 40 долларов за баррель. Для сравнения, еще в июле 2008 года нефть стоила больше 147 долларов за баррель. Таким образом, уже к весне 2009 года цена на газ будет значительно ниже 360 долларов за тысячу кубометров. В бюджете "Газпрома" на текущий год, к примеру, заложена средняя европейская цена в 280 долларов. Соответственно, для Украины она будет на уровне в 230 долларов за тысячу кубометров.

Газета "Время новостей" пишет, что к четвертому кварталу 2009 года цена на газ для Украины может составить всего 145 долларов за тысячу кубометров, что будет ниже цены, по которой Киев покупал газ в 2008 году - 179,5 доллара за тысячу кубометров. Это подтвердил и российский президент Дмитрий Медведев, отметив, что в конце года цены на газ могут снизиться в 2-2,5 раза.

As you can see, even GAZPROM expects that Europe will be paying an average of $280 for its gas this year, which means that Ukraine will be paying an average of $230 for its gas with the 20% discount. Even President Medvedev notes that by the end of the year, gas prices can go down by 2 or 2.5 times (barring a miraculous, for Russia, recovery in oil prices, which is unlikely). As I noted many times, it would have been foolish for Ukraine to sign a long term contract paying more than $400 for natural gas as prices are going down. Even $360 is too much given the current price of oil.

Why did they agree to $360? Quite simple. Ukraine cut a deal with Russia that allows Russian politicians to beat their chests saying that they got what they wanted from Ukraine and that they are still a "великая держава" (great power) and Ukraine signed a deal knowing that barring an unexpected increase in oil prices (very unlikely in the near future), they will effectively be paying less by the fourth quarter than what they were paying last year. So, who, exactly got the good deal?  :evil:

Source: http://www.lenta.ru/articles/2009/01/19/gas/

[OlgaH]

So, who, exactly got the good deal?  :evil:

Source: http://www.lenta.ru/articles/2009/01/19/gas/

Question is how much Ukraine has gas in its facilities. In December  Yuschenko saied 30 mcm, but Naftogaz saied only 16 cmc, plus acooding the link you gave 11 mcm belongs to RosUkrEnergo, and Ukraibe debt to RosUkrEnergo 600 million. Of course Ukraine will not tell how much gas they have exactly, but Ukraine press reports show that not everything is so good (no heat, no hot water and some plants stop to work...)

Kyiv Post wrote:

Officials said the gas price will be reviewed quarterly, so Ukraine is likely to get significant price relief later this year as gas prices ebb because of the drop in oil prices. But Ukraine will still pay significantly more than it did in 2008 even as the global recession of 2009 beats down its economy. "They're definitely going to pay a lot more for gas, and it was a strain for them to pay last year," said Chris Weafer, chief strategist for Uralsib bank of Moscow.

The chairman of Ukraine's parliament said on Monday the ex-Soviet state would pay Russia an average $240-250 per 1,000 cubic metres of gas throughout 2009, Ukrainian media reported.

Volodymyr Lytvyn, quoted by UNIAN news agency, said he based his calculation on discussions with the head of Ukrainian state energy company Naftogaz ahead of the expected signature of the gas deal in Moscow by the two countries' prime ministers.

Yes, we can make prognoses about gas price for 2009 and just wait 

[Misha]

Yes, we can make prognoses about gas price in 2009 and just wait 

Well, both President Medvedev and GAZPROM agree that the price is going down. Maybe you know something they don't? 

[OlgaH]

Well, both President Medvedev and GAZPROM agree that the price is going down. Maybe you know something they don't? 

and I already have posted about it 

[kievstar]

Ukraine is conserving gas so they can make it to April / June with gas they already have.  Then they never pay the $450 less 20% discount rate in 2009.

[OlgaH]

Why did they agree to $360? Quite simple.

Quite simple: the next elections in Ukraine 

[Misha]

Ukraine is conserving gas so they can make it to April / June with gas they already have.  Then they never pay the $450 less 20% discount rate in 2009.

Like I said, they let the Russians save face and claim that they won an important victory over Ukraine    It was generous of them  :evil:

[Misha]

Quite simple: the next elections in Ukraine 

Olga, you enjoy drive by posting. Can't you address ideas?

[OlgaH]

Olga, you enjoy drive by posting. Can't you address ideas?

Idea is simple. The next election in Ukraine will be at the end of 2009 or beginning of 2010, plus Ukraine experts also don't "bury" the idea of the early elections 

http://novosti.dn.ua/details/72749/

"a pig" for Yuschenko 
http://infoporn.org.ua/2009/01/20/tymoshenkoputyn_povenchannye_gazom_

[Misha]

Idea is simple. The next election in Ukraine will be at the end of 2009 or beginning 2010, plus Ukraine experts also don't "bury" the idea of early elections 

And? By the time the elections are held, Ukraine will certainly be paying less for natural gas than they are now. No, you do not know for certain what will be, but rational people look at trends and can make predictions as to what will be. Besides, Russian politicians should worry less about Ukrainian elections, rather I would be worrying about Russia's own internal politics. By the end of the year, the emergency fund piggy banks will be empty, the ruble devalued and the country facing a large deficit, a likely shrinking GDP and hundreds of thousands more Russians (if not millions) unemployed.

[OlgaH]

Of course as any other country Russia also is hurt by financial crisis. And its also depends on the Government fiscal and financial policy in the future, as Nouriel Roubini said and Russia most can recover fast.   

[Misha]

Of course as any other country Russia also is hurt by financial crisis. And its also depends on the Government fiscal and financial policy in the future, as Nouriel Roubini said and Russia most can recover fast.   

Maybe, if oil and gas prices skyrocket at some point in the future. In the meantime, Russia should brace for a worsening economic crisis.

[OlgaH]

Maybe, if oil and gas prices skyrocket at some point in the future. In the meantime, Russia should brace for a worsening economic crisis.

I agree with you. After surviving the economic crisis in 1990s I hope for the best  just prefer to stay 50x50 optimist-pessimist as I a;ways do

[Misha]

And, this form Grani.ru confirming Ukraine's plan to use up its reserves while waiting for the price of natural gas to drop: http://translate.google.com/translate?prev=hp&hl=en&u=http%3A%2F%2Fgrani.ru%2FEconomy%2Fm.146569.html&sl=ru&tl=en

In this case, the Google translation is quite decent.

[Misha]

I agree with you. After surviving the economic crisis in 1990s I hope for the best  just prefer to stay 50x50 optimist-pessimist as I a;ways do

I prefer to be the realist. Here is another interesting analysis of the economic challenges facing Russia: http://translate.google.com/translate?prev=hp&hl=en&u=http%3A%2F%2Fgrani.ru%2FEconomy%2Fm.146490.html&sl=ru&tl=en. The UN is now predicting that Russia's economy will shrink by 3% if the oil of price stays at their current prices.

[OlgaH]

I prefer to be the realist. Here is another interesting analysis of the economic challenges facing Russia: http://translate.google.com/translate?prev=hp&hl=en&u=http%3A%2F%2Fgrani.ru%2FEconomy%2Fm.146569.html&sl=ru&tl=en. The UN is now predicting that Russia's economy will shrink by 3% if the oil of price stays at their current prices.

Misha the link is again about Timoshenko.

[Misha]

Misha the link is again about Timoshenko.

Sorry, wrong link: http://translate.google.com/translate?prev=hp&hl=en&u=http%3A%2F%2Fgrani.ru%2FEconomy%2Fm.146490.html&sl=ru&tl=en

[OlgaH]

Sorry, wrong link: http://translate.google.com/translate?prev=hp&hl=en&u=http%3A%2F%2Fgrani.ru%2FEconomy%2Fm.146490.html&sl=ru&tl=en

Yes, it depends on oil price, but "if" is like 50X50. Different analysts "predict" different prices and situations.

Now the Energy Information Administration's (EIA) forecast for oil prices in 2009 – $51 a barrel
http://www.petroleum-economist.com/default.asp?page=14&PubID=46&ISS=25226&SID=715666

The consensus forecast of 32 analysts in a Reuters survey, taken Jan. 5-7, showed US crude would average $56.20 a barrel in 2009 and London's Brent crude $54.95, compared with $58.48 and $57.21 respectively in the previous poll in late-December.
http://www.arabianbusiness.com/543090-analysts-forecast-56-oil-price-average-for-2009

Money Morning
December 29th, 2008
In fact, the Paris-based International Energy Agency (IEA) – energy advisor to 28 industrialized nations – says oil will rise to $100 a barrel by 2015, as a result of a major “supply crunch,” and will ultimately soar to $200 a barrel.

But before it does, prices are likely to sink even further, perhaps falling as low as $20 a barrel in the first quarter of the New Year.

Indeed, much of Wall Street expects oil prices to average about $50 a barrel in 2009.

So who knows?    what can happen. (hopping for the best  )

PS  The grany.ru is sponsored by Boris Berezovsky 

[kievstar]

Oil is expected to be between $20 and $110 during 2009. But 2009 is not going to be a good year for the economy or 2010 is not going to be great either.  Recession is just starting.  If people think it is bad now, it is going to get worse as the job layoffs have not really started yet for some industries. 

But people need to remember if oil is $100 but volume sold is low - many countries suffer.  Need to look at volume consumed plus price.

[55North]

http://business.timesonline.co.uk/tol/business/columnists/article5555714.ece