Today the State oil and gas company Naftogaz Ukraine has paid $50 million to Russian Gazprom. Together with yesterday’s payment of $310 million it settles the gas supply bill of Ukraine for February 2009. Now all the Europe may breathe a sigh of relief: this month there will be no gas cut-off.
(Besides, I’ve noticed at least one mismatch – in figures. The figures I’ve mentioned above, given according to the information of the Secretariat of the President of Ukraine, have in total $360 million – which means that Ukraine imported only 1 billion cubic metres (bcm) of Russian gas in February. Gazprom’s officials have recently mentioned that Naftogaz has to pay $400 million. Hopefully it will not be a purpose for a new gas-fight between Ukraine and Russia).
Nevertheless, the gas supply remains in a center of a domestic turmoil in Ukraine. Muscular men wearing black masks and camouflage entered the Naftogaz Ukraine headquarters yesterday. They passed by the helpless company guards, and started to question the accountants of the company, and to search for something in the management office. All the main TV channels were translating this fascinating story in almost live regime (it’s a democracy!). “Armed people in camouflage pushed aside security, and showed no documents,” a spokesman of Naftogaz Valentyn Zemlyansky said to journalists.
The masked men appeared to be the secret service agents, who came to the Naftogaz Ukraine to take off the documents, related to Russian-Ukraine gas supply agreement, signed in January. The spokeswoman of the Security Service of Ukraine (SBU) Maryna Ostapenko informed press that the national security service is investigating criminal case on the illegal appropriation of 6,3 bcm of gas by the State company Naftogaz Ukraine. “Everything is within the frames of law”, Mrs. Ostapenko assured, and added that the Naftogaz authorities knew that the documents are to be seized that day. (The last remark explains such a huge media support of the action).
Anyway, the most interesting thing is not a scary picture, but the reasons of the scandal. As every contemporary problem in Ukraine, it has origins in the struggle for power between the President of Ukraine Viktor Yushchenko and the Prime Minister of Ukraine Yulia Tymoshenko.
The story begins in November 2008, when the Ukrainian Customs office refused to perform customs clearing of 11 bcm of Russian gas, pumped to Ukrainian gas storages by Russian Gazprom. The gas was dedicated for the well-known Swiss-registered intermediary RosUkrEnergo, half owned by Gazprom, and half – by Ukrainian billionaire Dmytro Firtash. The Customs of Ukraine bonded all the amount of gas (for some reasons), until the gas conflict with Russia started. (Here I would like to suppose again that the gas “war” with Russia was a planned thing).
In January 2009 – in frames of a settlement of the Russia-Ukraine gas dispute – Russians transferred to Naftogaz Ukraine the rights to claim from RosUkrEnergo the debt, which it has to Gazprom. The same time Russia received a 20 per cent discount on pipeline transit fees. A new set of bilateral Agreements eliminated RosUkrEnergo from Russia-Ukraine gas trading scheme.
As the PM says, Gazprom agreed to give the gas to Ukraine at a privileged price of $1,7 billion for all the 11 bcm of gas, and these money were to be considered as a payment for a transit of Russian gas to Europe. (I haven’t seen the documents, but it sounds like a true). This fact permitted to the Prime Minister Yulia Tymoshenko to declare that the average gas price for Ukraine in 2009 is $228 per tcm.
After the signing of the Agreements with Gazprom, Naftogaz Ukraine faced a new problem: a Head of the State Customs office of Ukraine Valery Khoroshkovsky refused to perform a custom clearing of mentioned amount of gas. He claimed the gas belongs to RosUkrEnergo.
The Prime Minister solved the problem: Mr. Khoroshkovsky was fired. But the President appointed him as a Deputy Head of the Security Service of Ukraine (SBU).
At long last, the Ukrainian Customs released the 11 bcm of ex-RosUkrEnergo-gas from the bond – in favour of the State company Naftogaz Ukraine. After that the SBU started the investigation mentioned above. On 3 March at night Deputy Head of the department of Energy Customs office Taras Shepitko was arrested. The next day men in mask appeared on the threshold of Naftogaz.
As for this moment, there is a ruling of a court, which states the SBU should stop the actions concerning the mentioned Naftogaz-case. Pro-presidential and pro-government experts are giving controversial comments. RosUkrEnergo still insists that is owns the gas. Gazprom didn’t make any statements concerning this concrete question.
Mrs. Tymoshenko is condemning the actions of the SBU. “They simply wanted to paralyze the activities of Naftogaz and destroy the gas distribution system in Ukraine,” she said. She also accused Mr. Yushchenko of lobbying on behalf of RosUkrEnergo. First Vice Prime Minister Alexander Turchynov also declared yesterday that “Viktor Yushchenko was patronizing RosUkrEnergo”, and that Mr. Khoroshkovsky “has joint business with Mr. Firtash”.
The press secretary of the President of Ukraine Iryna Vannikova informed yesterday that “President fully supports the actions of the SBU”. “The Security Service acts in frames of law. The actions of the Security Service agents are rather tough, but it is a demand of the circumstances of this case, - Mrs. Vannikova said. - President is sure that it is necessary to show a determination and insistence in the investigation of the identified corrupt practices”.
Showing posts with label Naftogaz. Show all posts
Showing posts with label Naftogaz. Show all posts
Thursday, March 5, 2009
Monday, March 2, 2009
Credit History. Ukraine will receive the second bailout of the IMF credit, but it is not enough to support the economy.
I was not blogging here for a long time due to some personal reasons, but also because it was rather difficult to write about the messy situation we’ve got here in Ukraine. Every day we receive a portion of new information on what’s wrong in the country. And the picture really frightens. Ukrainian economy is getting worse, national currency is falling down (starting from the last week, the price of one dollar is more that 9 hryvnias, it’s twice more than five months ago).
To save the economy Ukraine is in need of the external financing. Here is also the problem: the International Monetary Fund (IMF) refused to issue to Ukraine the second bailout of its $16,4 billion dollars (Kyiv was supposed to receive $1,864 billion on 15 February), because Ukrainian authorities failed to comply with the requirements of the Arrangement with the IMF.
As a result, all the main world rating agencies have cut Ukraine’s credit rating. Fitch Ratings cut the rating to B, the fifth-highest non-investment grade, and kept the outlook “negative”. Standard & Poor's Ratings Services cut Ukraine's foreign currency sovereign credit ratings by two notches, to CCC+/C from B/B. S&P left Ukraine's outlook negative, indicating it may reduce the ratings further. I have to remind, that the next letter after C is D, which means ‘default’. The new S&P rating for Ukraine is the lowest in Europe – one of the ‘rating colleagues’ of Ukraine is Pakistan.
Experts said that Ukraine has no chance to attract investments and receive new loans, until its relations with the IMF will not be ‘repaired’. The only country that is ready to give money to Ukrainian economy is Russia, but the interest of Moscow is the geopolitical influence and the control on some of the strategic centers of the economy – for example, the gas transport system of Ukraine, which is a key to Ukrainian and all the European energy security. Besides, there is an evidence of upcoming problems in gas area. The 7 of March is a deadline date for a new payment of Naftogaz Ukraine to Russian Gazprom. Gazprom has already warned it may cut off gas supply to Ukraine on March 8.
Coming back to the troubles of Ukrainian economy, I have to add that people who were making such a sad prognosis on the destiny of the IMF loan didn’t take to the account the fact that the IMF as an Organization is not interested in loosing of such a big borrower as Ukraine is (actually a biggest one for the current moment). The break-up of the cooperation with Ukraine would also mean for the IMF the failure of the IMF policy, which may question the appropriateness of all the system of anti-crisis measures, worked out my the IMF experts.
As a result, the IMF decided to change the tone of a dialogue with Ukraine: if the country cannot accomplish its obligations and commitments, one of the ways out is to change the rules. Ukrainian authorities were asked to write a new Letter of Intent to the IMF, listing a new set of measures, more appropriate for the today’s economy state. I wrote about this issue for one Ukrainian newspaper, and here and here are the links to my recent articles (in Russian language).
So, next week (or a bit later) the Mission of the IMF will be back to Kyiv. Ukraine may receive the second tranche of the loan in March 2009. But it will not resolve the whole problem. To deal with the essential budget deficit, Ukraine has to ask for extra-loans (back to question of Russian ambitions), or to monetize it (back to the question of a severe inflation). Let’s see, which evil will be chosen by Ukrainian authorities?
To save the economy Ukraine is in need of the external financing. Here is also the problem: the International Monetary Fund (IMF) refused to issue to Ukraine the second bailout of its $16,4 billion dollars (Kyiv was supposed to receive $1,864 billion on 15 February), because Ukrainian authorities failed to comply with the requirements of the Arrangement with the IMF.
As a result, all the main world rating agencies have cut Ukraine’s credit rating. Fitch Ratings cut the rating to B, the fifth-highest non-investment grade, and kept the outlook “negative”. Standard & Poor's Ratings Services cut Ukraine's foreign currency sovereign credit ratings by two notches, to CCC+/C from B/B. S&P left Ukraine's outlook negative, indicating it may reduce the ratings further. I have to remind, that the next letter after C is D, which means ‘default’. The new S&P rating for Ukraine is the lowest in Europe – one of the ‘rating colleagues’ of Ukraine is Pakistan.
Experts said that Ukraine has no chance to attract investments and receive new loans, until its relations with the IMF will not be ‘repaired’. The only country that is ready to give money to Ukrainian economy is Russia, but the interest of Moscow is the geopolitical influence and the control on some of the strategic centers of the economy – for example, the gas transport system of Ukraine, which is a key to Ukrainian and all the European energy security. Besides, there is an evidence of upcoming problems in gas area. The 7 of March is a deadline date for a new payment of Naftogaz Ukraine to Russian Gazprom. Gazprom has already warned it may cut off gas supply to Ukraine on March 8.
Coming back to the troubles of Ukrainian economy, I have to add that people who were making such a sad prognosis on the destiny of the IMF loan didn’t take to the account the fact that the IMF as an Organization is not interested in loosing of such a big borrower as Ukraine is (actually a biggest one for the current moment). The break-up of the cooperation with Ukraine would also mean for the IMF the failure of the IMF policy, which may question the appropriateness of all the system of anti-crisis measures, worked out my the IMF experts.
As a result, the IMF decided to change the tone of a dialogue with Ukraine: if the country cannot accomplish its obligations and commitments, one of the ways out is to change the rules. Ukrainian authorities were asked to write a new Letter of Intent to the IMF, listing a new set of measures, more appropriate for the today’s economy state. I wrote about this issue for one Ukrainian newspaper, and here and here are the links to my recent articles (in Russian language).
So, next week (or a bit later) the Mission of the IMF will be back to Kyiv. Ukraine may receive the second tranche of the loan in March 2009. But it will not resolve the whole problem. To deal with the essential budget deficit, Ukraine has to ask for extra-loans (back to question of Russian ambitions), or to monetize it (back to the question of a severe inflation). Let’s see, which evil will be chosen by Ukrainian authorities?
Sunday, February 8, 2009
Hugging to Death. The gas consortium of Ukraine, Russia, and Europe will not solve a problem of EU energy security, but undermine Ukrainian interests.
There is at least one clear conclusion from the “Cold war” of January 2009: to avoid a future gas supply crisis, Europe needs a common energy security policy. I would suggest to read a blog-post of Charles Tannock, Member of the European Parliament for London, and an article of Andrew Wilson, a senior policy fellow at the European Council on Foreign Relations, published in the Wall Street Journal, for extra thoughts and information on this point.
I agree that the unified energy supply scheme is a very positive thing for Europe. But what worries me is that the new European energy security concept is moving step-by-step against the national interests of Ukraine – not without help of Russia and powerful trans-national corporations. In a widely proposed system of co-operation, which foresees a foundation of gas consortium with the participation of the EU, Ukraine and Russia, all the parties are winning some benefits, except Ukraine, which is supposed to lose control over its gas pipelines’ system for decades (or for ever, depending on ‘flexibility’ of Ukrainian officials).
To my point of view, the first step to the formation of the united system of European Energy Security should be a very straight price talk. Europe cannot be united in the gas supply questions, until it doesn’t have a common formula of price for gas and its transportation. Without such an agreement all the other steps would be inefficient.
I liked very much a recent speech of the Prime Minister of Ukraine Yulia Tymoshenko at the Munich Security Conference on Saturday, 7 February 2009. “The price of the gas transit has not been formed in unified way. The question is: Why?” she said. “If we find such common approaches, we will be able to eliminate a political component from the system of pricing and supplies of gas to all the European countries.”
But why indeed the EU, not talking about the European continent as a whole, hadn’t manage to form the unified gas price and transit approach for all the time of its existence? The question is not rhetoric, and the answer is simple: the formation of the common Energy Supply (or Security, if you want) System for Europe is disadvantageous for the main European energy corporations. It is not a secret that the oil and gas trade business is very profitable, inter alia, by its shadow or semi-shadow schemes, which would be impossible to realise, if all the business were totally transparent and understandable even for members of the European Commission or the European Parliament. So, the establishment of a really clear system of gas trade in Europe looks like a miracle at the moment.
What next? The international investment conference on the modernisation of Ukrainian gas transit system is going to take place on 23 March in Brussels, according to the mutual arrangement of the President of Ukraine Viktor Yushchenko and the President of the European Commission Jose Manuel Barroso of 27 January 2009. The talk-work on the preparation of public opinion has already started. Vladimir Chizhov, Russia's ambassador to the European Union, said to journalists on 4 February 2009 that “the fact that the Ukrainian pipeline network was neglected ever since the collapse of the Soviet Union is recognised by everybody... The fact that its technical status is not up to standard is recognised by everybody. The fact that money supposed to be spent on maintenance from transit fees was spent on something else is recognised by everybody”. Only the last question may be considered as a full truth.
The potential members of the future Consortium are: Gazprom, Naftogaz Ukraine, and directly involved European companies – like E.ON Ruhrgas AG, GDF Suez SA., Gaz de France, BASF SE's Wingas, and Eni SpA. Russians, Ukrainians and Europeans would own the one third of the company each. People from GDF Suez, E.ON Ruhrgas AG and Eni SpA have already had the consortium-related meeting with the Prime Minister of Russia Vladimir Putin in Berlin on 16 January 2009.
Ukraine is supposed to give (rent) to the consortium its gas pipelines system, Russian Gazprom – gas fields, European companies – money. Some Western analysts say that Ukrainian government could sell a stake in Ukraine’s gas transit system to a new consortium. I don’t think it’s a good idea for Ukraine and its future.
Yes, Ukraine needs money for the gas transit system upgrade, but it may find money by itself (it will be not difficult to take a credit for a good-written & well-thought project), going on with receiving the full profits from the transit of the Russian gas to Europe. Ukraine is going to receive from Russia from $2 billion in 2009 to $4 billion per year, starting from 2010.
As for the European Union there is no economic difference at all, whether there is the Russia-Ukraine-EU consortium or not. Russia may find a purpose to switch off gas anyway, and the possible consortium-profits will be collected in hands of managers of the multinationals. And what is good for Ruhrgas, Shell or Gaz de France is not automatically good for Germany, Netherlands, or France. Don’t even mention the interests of tax-payers: the companies, which may directly operate with Ukrainian gas pipeline system, would be for sure an affiliated structures of famous brands, registered in offshore zones.
The establishment of the European common energy security system is not a question of today. It is even not a question of tomorrow. But the Europe has to start preparations for the day after tomorrow right now, working out all the papers needed, and communicating with partners – especially hard talks are supposed to be with Russia. Moreover, I may bet that the talks would finish with nothing. The real goal of Russia, Gazprom, and European energy corporations in Consortium-project are extra profits they may have, fooling Ukraine around. The sorting out the system of the gas supply to Europe looks like not profitable for them at all. The common sense had never beaten the business strategy. It’s a rule for today. What will be the day after tomorrow or later (I mean in long-term period)? Nobody knows, but the little strokes fell great oaks.
I agree that the unified energy supply scheme is a very positive thing for Europe. But what worries me is that the new European energy security concept is moving step-by-step against the national interests of Ukraine – not without help of Russia and powerful trans-national corporations. In a widely proposed system of co-operation, which foresees a foundation of gas consortium with the participation of the EU, Ukraine and Russia, all the parties are winning some benefits, except Ukraine, which is supposed to lose control over its gas pipelines’ system for decades (or for ever, depending on ‘flexibility’ of Ukrainian officials).
To my point of view, the first step to the formation of the united system of European Energy Security should be a very straight price talk. Europe cannot be united in the gas supply questions, until it doesn’t have a common formula of price for gas and its transportation. Without such an agreement all the other steps would be inefficient.
I liked very much a recent speech of the Prime Minister of Ukraine Yulia Tymoshenko at the Munich Security Conference on Saturday, 7 February 2009. “The price of the gas transit has not been formed in unified way. The question is: Why?” she said. “If we find such common approaches, we will be able to eliminate a political component from the system of pricing and supplies of gas to all the European countries.”
But why indeed the EU, not talking about the European continent as a whole, hadn’t manage to form the unified gas price and transit approach for all the time of its existence? The question is not rhetoric, and the answer is simple: the formation of the common Energy Supply (or Security, if you want) System for Europe is disadvantageous for the main European energy corporations. It is not a secret that the oil and gas trade business is very profitable, inter alia, by its shadow or semi-shadow schemes, which would be impossible to realise, if all the business were totally transparent and understandable even for members of the European Commission or the European Parliament. So, the establishment of a really clear system of gas trade in Europe looks like a miracle at the moment.
What next? The international investment conference on the modernisation of Ukrainian gas transit system is going to take place on 23 March in Brussels, according to the mutual arrangement of the President of Ukraine Viktor Yushchenko and the President of the European Commission Jose Manuel Barroso of 27 January 2009. The talk-work on the preparation of public opinion has already started. Vladimir Chizhov, Russia's ambassador to the European Union, said to journalists on 4 February 2009 that “the fact that the Ukrainian pipeline network was neglected ever since the collapse of the Soviet Union is recognised by everybody... The fact that its technical status is not up to standard is recognised by everybody. The fact that money supposed to be spent on maintenance from transit fees was spent on something else is recognised by everybody”. Only the last question may be considered as a full truth.
The potential members of the future Consortium are: Gazprom, Naftogaz Ukraine, and directly involved European companies – like E.ON Ruhrgas AG, GDF Suez SA., Gaz de France, BASF SE's Wingas, and Eni SpA. Russians, Ukrainians and Europeans would own the one third of the company each. People from GDF Suez, E.ON Ruhrgas AG and Eni SpA have already had the consortium-related meeting with the Prime Minister of Russia Vladimir Putin in Berlin on 16 January 2009.
Ukraine is supposed to give (rent) to the consortium its gas pipelines system, Russian Gazprom – gas fields, European companies – money. Some Western analysts say that Ukrainian government could sell a stake in Ukraine’s gas transit system to a new consortium. I don’t think it’s a good idea for Ukraine and its future.
Yes, Ukraine needs money for the gas transit system upgrade, but it may find money by itself (it will be not difficult to take a credit for a good-written & well-thought project), going on with receiving the full profits from the transit of the Russian gas to Europe. Ukraine is going to receive from Russia from $2 billion in 2009 to $4 billion per year, starting from 2010.
As for the European Union there is no economic difference at all, whether there is the Russia-Ukraine-EU consortium or not. Russia may find a purpose to switch off gas anyway, and the possible consortium-profits will be collected in hands of managers of the multinationals. And what is good for Ruhrgas, Shell or Gaz de France is not automatically good for Germany, Netherlands, or France. Don’t even mention the interests of tax-payers: the companies, which may directly operate with Ukrainian gas pipeline system, would be for sure an affiliated structures of famous brands, registered in offshore zones.
The establishment of the European common energy security system is not a question of today. It is even not a question of tomorrow. But the Europe has to start preparations for the day after tomorrow right now, working out all the papers needed, and communicating with partners – especially hard talks are supposed to be with Russia. Moreover, I may bet that the talks would finish with nothing. The real goal of Russia, Gazprom, and European energy corporations in Consortium-project are extra profits they may have, fooling Ukraine around. The sorting out the system of the gas supply to Europe looks like not profitable for them at all. The common sense had never beaten the business strategy. It’s a rule for today. What will be the day after tomorrow or later (I mean in long-term period)? Nobody knows, but the little strokes fell great oaks.
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