From October 2004 to past March about 7,6 billion sq. m. of natural gas, belonging to Gazprom, disappeared from Ukrainian gas storage places. Ukraine insists that $3.5 billion worth of gas did not leave the country. However, Gazprom cannot find it. This problem was raised on the meeting between Ukrainian President Viktor Yushenko and head of the Gazprom Alexei Miller.
The Consortium without Perspective
The negotiations between Yushenko and Miller started in the evening of April 26. But conversation, in which also participated Ukrainian Prime Minister Yulia Timoshenko and head Naftogaz of Ukraine Alexei Ivchenko, went well into the night. On Tuesday, the sides decided not to announce any results of the negotiations. Though, there were some interesting subjects surfaced in the course of the meeting.
The main question – the purchase of the Gazprom’s gas by Ukraine for market price and growth of the transit tariffs – was almost sold prior to the negotiations. The sides mostly discussed the price levels and were trying to find the definition to “market” and ‘European” prices. Though, even by the end of the negotiations, the sides could not establish the “right” price level. The other problem in the scope of the discussion was the purchase by Naftogaz of Ukraine a share of Swiss RosUkrEnergo. The Swiss company, the transit operator of Turkmenian gas on Russian territory, is owned in equal shares by Austrian Group Reiffeisen and Gazprombank. Miller commented that Gazprom will not prevent the purchase of Reiffeisen’s share by Ukraine, but will not sell its own share.
And, finally, the most controversial subject – potential conflict of Ukraine and Russia over the Turkmenian gas – was practically not discussed. Yushenko tried to bring up an idea of possibility creating international consortium to transport gas from Turkmenistan to Europe through Kazakhstan, Russia and Ukraine. However, Miller responded pretty harshly: “For the specialist, the situation with gas reserves is evident.” He characterized the consortium idea is the “phantom” one.
And Miller has all the grounds to say so. According to unofficial information fom Gazprom, the Turkmenistan’s claim to increase the production of gas starting from 2009 and through several years by 120 billion sq.m. or even more(right now is about 55 billion sq. m.) cannot be fulfilled by existing reserves in gas depositories. Right now the production from existing depositaries steadily declines or stands still on the “plateau.” Thus, the dialog did not happen. Gazprom said that it is not even sure if Turkmenistan would be able to fulfill its current contractual obligation with Gazprom. The discussion had died in that point.
The discussion about the perspectives of gas transporting consortium ended up with the same negative result. Both, Miller and Ivchenko, stated the absence of clear perspectives. The Gazprom was only interested in one project –investments into the pipeline Bogorodchany –Uzhgorod -- as a first stage of executive power transfer to the Ukrainian consortium of gas transportation. The sides agreed to continue research the possibilities to create the consortium. The Gazprom officials joke:”The verdict is not final yet.” However, this project will never become a reality without Naftogaz’ Western partners’ participation. Though, neither Ruhrgas, neither Gas de France nor Polish PNG&G show much enthusiasm to join the consortium.
Gas disappeared in the thin air
The meeting lasted long, probably, due to the one important subject. The Gazprom’s press-release cheerfully calls it “the questions about the gas, which was kept in underground storages (US) in Ukrainian territory.” Gazprom meant 7, 6 billion of sq.m pumped into the Ukrainian US in summer of 2004.
The problem is that from October to March 2005, in the midst of the Ukrainian Orange Revolution, Naftogaz Ukraine was refusing to complete Gazprom’s requests to give up the gas, sitting in the underground storages. In the mean time, Naftogaz was using all kinds of excuses including one saying that “this gas does not exist.” According to Gazprom, the gas was never exported by Ukraine. And Naftogaz confirms that the gas wasn’t moved. During the negotiations, Miller proposed to the Naftogaz of Ukraine to buy these 7, 6 billion sq.m. In this case scenario, not Gazprom but Ukraine would have to start to beat the dead horse trying to find $3.5 billion worth of gas. Despite the Naftogaz assurance that it will buy the disappeared shipment of gas, the purchase had never materialized.
Sergey Lukyanchenko, head of the Naftogaz of Ukraine press service, told Kommersant yesterday that he “didn’t get any rights to publicize any kind of facts” of Tuesday’s negotiations results. Most likely, another round of the negotiations will start sometime in May.