Just to note some figures for a future reference. Yesterday (23 January 2009) the Secretariat of the President of Ukraine issued an analysis of Russia – Ukraine gas agreement.
Acording to the Secretariat, an average price of Russian gas for Ukraine in 2009 will be $256/tcm (price in the 1st quarter 2009 - $450, actual Ist quarter price with the 20% discount - $360). Average price of Russian gas in 2009 for Slovakia will be $240 (Ist quarter price - $296), for Hungary – 237 ($403), for Poland - $300-310 ($458), for Czech Republic - $340-350 ($420), for Romania - $310-320 ($470), and for Germany - $250-260 ($330-340).
If the “Secretariat prices” are true (I may question the current gas price for Germany, which is told to be $330-340, but is around $450), Ukraine with the base price of $450 in the 1st quarter of 2009 looks like a definite loser.
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There are a lot of figures being thrown around, and, as usual, Yushchenko and his secretariat want to play hyper-ultra competitive politics against Tymo, and vice versa.
But the bottom line is this - the agreement was a "face-saving" (as the Japanese say) agreement, and as usual in roosha and Ukraine, all is not as it seems.
Quick and dirty:
The price is adjusted quarterly. For the 1st quarter, roosha and Putkin can pound their chest and claim a price of $450, and who "tough" they were on Ukraine. But Ukraine gets a discount, and doesn't plan to use much rooshan gas during the 1st quarter, because it has huge gas storage.
Next, Ukraine made out better than in 2008 on gas transit, because so-called transit gas is being sold to Ukraine at $153. By the time all is said and done, Ukraine makes a $1 billion on transit - better than in 2008, even though roosha gets to pound its chest again, and claim that it is still paying only $1.7 - the prior tariffed rate.
Plus - RUE is gone from the deal. Why would Putkin want to get rid of RUE? Because, as it turns out, on the Ukrainian side, Firtash, 45% owner, was hiding revenues from his rooshan partners. And the Kremlin/Gazprom don't necessarily need Firtash to still "take care of their own," as is Gazprom's culture.
So the forecasted average rate is $228 for 2009, which the Presidential secretariat conveniently ignores - as does Gazprom.
Explanation in Ukrainian here:
http://www.epravda.com.ua/publications/497a0853d637b/
But I'm just wondering, how this new gas formula will work in 2010 and later, when we will not have any discounts, and when the oil price will grow up?..
It's my understanding that the quarterly price adjustments will be tied to the price of oil, which, as we have seen, has fluctuated over time.
But the transit prices go up also.
One thing is for sure - if Ukraine expects to survive under these new gas contracts, it will have to become a far more efficient user of gas, and it will have to upgrade its pipeline system - as many people have pointed out.
Ukraine is, astonishingly, the biggest user of gas in Europe, with a smaller population than other countries relatively close to its size.
In other words, Ukraine is incredibly wasteful in its use of gas. That has to be remedied.
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