A conflict between Ukraine and Russia due to the gas prices and transit will not emerge again, if Kiev can help it. “Surely, it will be difficult to do... But Prime Minister Yulia Tymoshenko, as before, is going to do her best, to take every effort so that confidence in Ukraine’s timely payments is kept,” Ukrinform quoted Ukraine’s Deputy Prime Minister Hryhoriy Nemyria as saying.
According to the January 2009 gas contract between Russian gas monopoly Gazprom and Ukraine’s state-owned energy company Naftogaz, the latter should pay for Russian gas by the 7th day of the month following the supply month. Otherwise, Naftogaz will have to make payments for gas in advance.
Tymoshenko and Russian Prime Minister Vladimir Putin verbally agreed in September that Ukraine would pay only for the gas really supplied. However, the contract is “take-or-pay” and there’s no saying that at the end of the year or the beginning of next Gazprom will not insist Ukraine to buy as much gas as it is obliged to purchase under the contract. Especially since Ukraine plans to raise the transit fees for Russian gas in January, a Ukrainian official told New Europe on October 29.
Gazprom doesn’t cut any slack to European consumers. On the sidelines of an energy conference in Moscow, Gazprom’s deputy chief executive, Alexander Medvedev, last week warned European customers it expects them to buy as much gas as they are obliged to purchase under their “take-or-pay” contracts. The company’s largest European customers owe Gazprom about $2.5 billion due to a breach of contracts. This is because European clients have had to sharply reduce gas consumption because of the economic crisis and other reasons.
If Gazprom demands that Ukraine also pays what it owes Gazprom due to a breach of contract there will be another gas war, the Ukrainian official said, adding that Naftogaz is experiencing financial problems.
So... will there be another gas war? That’s the 64-million-dollar question. It depends on whether troubled Naftogaz can pay its gas bills on a regular basis, how much gas Naftogaz will actually take and how much it is stipulated in the original contract and whether or not the Ukrainian presidential elections in January will dictate to some extent Moscow’s relations with Kiev.
Russia is planning to build the Nord Stream and South Stream pipelines to strengthen its control of the European market and to bypass Ukraine. For its part, the European Union is pushing forward the Nabucco pipeline that aims at securing sources of gas from non-Russian sources. The Ukrainian official said Kiev is not afraid of Nord Stream since it will transport gas supplies from new fields to northern European countries. But it is concerned about South Stream since Russia may divert some of the gas supplies transiting Ukraine to fill the 63-billion-cubic-meter planned pipeline.
Robert Shetler-Jones, chief executive of Group DF that holds Ukrainian gas billionaire Dmitry Firtash’s business assets, including ousted RosUkrEnergo, which is currently in a dispute with Naftogaz over 11 bcm of gas stored in Ukraine, told New Europe that instead of constructing a large number of new routes to Europe, it is in the best interest of the EU, Ukraine and Russia to ensure that Ukraine’s transit infrastructure is secure and operates normally. He called for “freeing up the political issues in Russia and Ukraine and allowing what is by far the best and cheapest from any routes for former Soviet gas to Europe, which is via Ukraine.”
   KGeropoulos@NEurope.eu