Gazprom may pre-pay Ukraine for gas transit

29/04/2009 21:08 MOSCOW, April 29 (RIA Novosti) - Russia could pay Ukraine in advance for the transit of Russian gas to enable Ukraine's Naftogaz to pay for Russian gas supplies, a source in the Russian delegation said Wednesday.

Advance payments "will enable Naftogaz of Ukraine to pay for April gas supplies," the source said.

Gazprom expressed concerns earlier in the day over Ukraine's ability to pay for gas.

"Gas will not be sold on credit. In this respect, we are concerned over the situation in Ukraine, taking into consideration its low ability to pay and political instability," said Viktor Valov, deputy head of the gas monopoly's department for contacts with former Soviet republics.

Prime Minister Vladimir Putin discussed all aspects of the gas issue with his Ukrainian counterpart, Yulia Tymoshenko, when they met in Moscow on Wednesday.

After the talks, Tymoshenko said that on the specific issue of gas intended for storage facilities rather than consumers, Kiev had proposed that Moscow pay in advance for the transit of the gas, allowing Ukraine to use the receipts to pay the costs of pumping gas into its underground reservoirs.

"The Ukrainian side has proposed signing an intergovernmental agreement whereby [Russia] would pay in advance for [Ukraine's] transit services, a scheme that we will be able to use to cover the costs involved in the pumping of gas into underground storage facilities," the Ukrainian prime minister said.

Putin says Gazprom waives fine for Ukraine's low gas intake

29/04/2009 20:21 MOSCOW, April 29 (RIA Novosti) - Russia's prime minister said on Wednesday that energy giant Gazprom would waive the $2 billion fine it is entitled to demand from Ukraine for failure to buy the contracted volume of natural gas.

"These sanctions will not be taken," Vladimir Putin told reporters after talks with his Ukrainian counterpart, Yulia Tymoshenko.

Putin said Russia was counting on Ukraine to continue to pay for Russian natural gas supplies on time.

Payments "are now coming in regularly and without interruption," Putin said, expressing the hope that "this will continue in the future," he said.

Gazprom, however, expressed concerns on Wednesday over Ukraine's ability to pay for gas.

"Now that we have switched to market relations with all the former Soviet republics, gas will not be sold on credit. In this respect, we are concerned over the situation in Ukraine, taking into consideration its low ability to pay and political instability," said Viktor Valov, deputy head of the gas monopoly's department for contacts with former Soviet republics.

On payment of gas intended for storage facilities rather than consumers, Tymoshenko proposed that Moscow pay in advance for the transit of the gas, allowing Ukraine to use the receipts to pay the costs of pumping gas into its underground reservoirs.

"The Ukrainian side has proposed signing an intergovernmental agreement whereby [Russia] would pay in advance for [Ukraine's] transit services, a scheme that we will be able to use to cover the costs involved in the pumping of gas into underground storage facilities," the Ukrainian premier said.

Tymoshenko also assured Putin that modernizing Ukraine's gas transit system would be impossible without Russia's participation.

An agreement between the European Union and Ukraine to modernize the former Soviet republic's gas pipelines raised tensions between Kiev and Moscow last month, with relations already strained following the gas dispute at the start of the year that disrupted Russian energy supplies to Europe in January.

"We certainly see Russia and Gazprom as partners in modernizing Ukraine's gas transit system. This work cannot be completed without Russia," Tymoshenko said.

Ukrainian and Russian PMs try to head next gas dispute off at the pass

29 April, 2009, 21:52

Vladimir Putin insists that Russia, the EU and Ukraine should set up a consortium to modernize Ukraine's gas pipeline network, with Moscow still to decide on a $5 billion loan to Kiev to pay for stored gas.

Gas talks between Kiev and Moscow were tough, as usual, with only one conclusion – another round of negotiations is needed. The main issue – Russia’s participation in upgrading the pipeline network in Ukraine.

Last month, Ukraine and the EU struck a deal to finance the work – excluding Russia from the project. Vladimir Putin wants Kiev to set up a gas consortium that will take all parties’ interests into the account.

“Several years ago we offered to create an international consortium, which will include Russia, Ukraine and European countries. This consortium was supposed to lease the gas transit system, while it would remain property of Ukraine. While the consortium would bear all the risks of modernisation and funding. What doubts could that bring about if the interests of all sides are respected?”

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Yulia Timoshenko responded that under Ukrainian law, the gas pipeline system is state-property, and can’t be rented out. At the same time Kiev is asking Moscow to pay $5 billion worth of transit fees in advance – money which Ukraine will use to buy gas for storage.

“When gas is pumped into an underground storage facility, it’s not paid for by the consumers. Ukraine will come up with a project of an intergovernmental agreement which will space out the payments for the gas already pumped in. It will incorporate payments for transit in advance.”

Putin did not seem persuaded. He said the scheme is risky for Gazprom as long as the question of who owns and operates the pipeline system remains open.

“If Gazprom pays for transit in advance for several years and then the Ukrainian gas transit system is changed – as is planned, and the place of Naftogaz will be taken by a different entity – who will be responsible for this money?”

There was only one area of universal agreement. Russia will not fine Ukraine for importing less gas than it contracted for back in January.