#27 - JRL 2009-163 - JRL Home
Moscow Times
September 2, 2009
Tymoshenko, Putin Reach Gas Deal
By Anatoly Medetsky

Prime Minister Vladimir Putin and his Ukrainian counterpart, Yulia Tymoshenko, appeared to agree Tuesday on pressing issues in the precarious gas trade between their countries, but they gave no indication of how long the amicability would last.

Putin agreed to let Ukraine continue importing and paying for only as much gas as its struggling economy needs, currently about half of what its contract with Gazprom binds it to buy, Tymoshenko said after talks with him.

The global economic crisis has to be taken into account in bilateral trade, Putin said, adding that Gazprom and state energy company Naftogaz Ukrainy would iron out the details.

The agreement should come as a great relief to Ukraine, because the contract ­ under the take-or-pay clause ­ obliges it to pay for much of the gas it is not importing.

Tymoshenko sounded optimistic about the future of gas supplies when she opened the meeting with Putin on the sidelines of a gathering of European political leaders in the Polish town of Sopot to mark the 70th anniversary of the start of World War II.

“In my view, one can say we removed all gas problems, or at least are firmly on the way to having no problems about the issue,” she said. “I am always delighted to have our meetings and I know that they always result in real actions.”

Neither of the prime ministers indicated the time span of their agreement. A call to Gazprom spokesman Sergei Kupriyanov went unanswered Tuesday afternoon.

Tymoshenko has been on much better terms with Russian leaders recently than Ukrainian President Viktor Yushchenko, which may be a sign of Moscow’s tacit support of her ahead of presidential elections in January, in which both are expected to run.

President Dmitry Medvedev in August blamed Yushchenko for dramatically worsening bilateral ties and ruled out any improvement as long as Yushchenko remains president.

Russia could revisit the agreement as Ukraine’s economy improves, said Pavel Sorokin, a gas analyst at UniCredit Securities.

“If they force Ukraine to pay in full it could provoke a conflict around the transit to Europe,” he said.

Russia’s most recent standoff with Ukraine over payments left many countries in eastern and southern Europe without gas for several weeks in January. A similar halt occurred in January 2006.

The disruptions prompted the European Union to step up efforts to find more energy alternatives to Russia, from which it imports about a quarter of its gas.

Putin and Tymoshenko will next meet in Ukraine in October, Tymoshenko said. A broad range of subjects, including construction of Russian nuclear power reactors, cooperation in airplane building, machine building and shipbuilding, will be on the agenda.

Putin also offered assurances of reliable gas supply to the host country, Poland. Polish Prime Minister Donald Tusk said Poland expected to sign a new supply contract with Gazprom later this fall.

“We once again confirmed that gas cannot be part of politics in Russian-Polish relations,” Tusk said, according to comments posted on the Russian government web site. “It means there’s a chance to conclude talks on the gas contract quickly.”

Russia is ready to supply 2 billion cubic meters of gas that Poland previously bought through RosUkrEnergo, the now defunct Russian-Ukrainian intermediary, Putin said.

He pointed out that if Poland wants to buy more gas from Gazprom, the Polish government has to push up the limit for such purchases that it put in the current contract with Gazprom.

“These are technical issues and there are no problems here,” Putin said.

The issue of Nord Stream, the proposed pipeline to carry Russian gas to Germany under the Baltic Sea, appeared to have lost some of its weight in the Russian-Polish relations.

Tusk said Poland did not regard the pipeline as an “important” element of ties but held the view that it was economically and environmentally flawed.

“But we approach this constructively and calmly,” he said.

Poland has a number of competing offers that could be less expensive but more environment-friendly, Tusk said, without elaborating.

Putin said Nord Stream did not come up during his talks with Tusk, but he reiterated that the project was not directed against Poland, which would stand to lose future gas transit revenue from the new pipeline. He said Russia was simply seeking to diversify its export routes.

“There’s no anti-Polish subtext,” Putin said at the news conference after the talks.

Despite the positive signs, a new irritant emerged between Moscow and Warsaw, however. Putin urged both the Polish and Russian governments to look into how a Polish individual ended up owning 4 percent of the venture that holds the gas pipeline running from Russia through Poland, saying corruption might have played a role in the deal.

The agreement to construct a leg of the Yamal-Europe pipeline said the Russian and Polish governments would own it 50-50, Putin said, noting that the transfer of the 4 percent would not have been possible without consent from the Russian side.

Putin was also scheduled to meet with Bulgarian Prime Minister Boyko Borisov later Tuesday to discuss joint energy projects such as the South Stream gas pipeline and construction of a nuclear power reactor in Bulgaria.

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