Ukraine Premier Fails To Ditch Gas Trader

KIEV, Ukraine -- Rosukrenergo, the controversial Swiss-registered natural gas trader co-owned by Gazprom and two Ukrainian businessmen, will retain its position in the multi-billion-dollar business of supplying Ukraine, officials in Kiev announced on Friday.

Yulia Tymoshenko was not successful in removing Rosukrenergo.

Yulia Tymoshenko, Ukraine’s premier, had pledged to remove Rosukrenergo, whose role she has described as murky, but the company will hold on to its position as Gazprom’s choice to be the monopoly supplier of gas for Ukraine.

A spokesperson at Naftogaz, the Ukrainian state energy company, said an agreement was signed this week with Rosukrenergo on the supply of nearly 50bn cubic metres of gas at a price tag of $179.50 per 1,000 cubic metres, an increase from last year’s $130 rate.

“This is a compromise, but a victory considering the circumstances,” said Oleksandr Hudyma, an energy adviser to Ms Tymoshenko.

Officials at Rosukrenergo declined to comment, and refused to say whether their company would remain a competitor for other Gazprom export arms in the lucrative business of supplying consumers in Europe by pumping gas through Ukraine.

Officials at Naftogaz said further agreements still needed to be signed on this and other issues.

The agreement signed this week follows a standoff earlier this year that threatened to dent supplies to Europe as during a 2006 price dispute. Europe receives a quarter of its gas from Russia, with the lion’s share being pumped through Ukraine’s vast pipeline system.

This year, supplies to Ukraine were reduced by about 50 per cent; Europe was not affected.

Rosukrenergo is 50 per cent owned by Gazprom. Stakes of 45 per cent and 5 per cent belong to Ukrainians Dmytro Firtash and Ivan Fursin.

Through negotiations with Gazprom, Ms Tymoshenko’s government managed to remove a middleman company half-owned by Rosukrenergo from its position as monopoly importer of gas to Ukraine and supplier to industry.

In doing so, she provided a fresh lease on life to the bankruptcy-troubled Naftogaz, which will now control all imports and resell gas on the domestic market to other traders, including a Gazprom affiliate.

Referring to Gazprom’s decision to hold on to Rosukrenergo as supplier to Ukraine, Mr Hudyma said: “This is foremost a problem for the Russian side now.”

“Buying gas directly from Gazprom would be the transparent option, but we can’t twist Gazprom’s hands. They decided to keep hold of these shadowy schemes; Ukraine has let go of them,” he added.

A Gazprom official said on condition of anonymity that long-term contracts signed with Rosukrenergo and a complicated gas debt situation involving Ukraine complicated efforts to remove middlemen this year.

Both countries are still engaged in tense price negotiations for 2009 following warnings this year from central Asian producers that their export prices would sharply rise. Ukraine is heavily dependent on gas from central Asian producers which is resold by Russia.

“In future talks we will seek to convince Gazprom to remove all middlemen,” Mr Hudyma added.

Source: Financial Times