Russia, owed over a billion dollars by Ukraine for supplies of natural gas, is eyeing stakes in some of the former Soviet republic's plum enterprises as a way of recovering part of the debt.
A Ukrainian delegation due in Moscow on March 5 is expected to haggle over the $1.2 billion debt owed for gas deliveries last year and for the period 1991-1994. Russian officials on Tuesday suggested one way out for Ukraine was to give up equity in its run-down energy business.
In remarks addressed to Ukraine, Russian First Deputy Prime Minister Boris Nemtsov told an energy meeting in Moscow: 'If you can't give us cash, then give us equity.' Ukraine is the largest consumer and conveyor of Russian gas. It consumes 52 billion to 53 billion cubic meters of Russian gas annually and transports about 120 billion cubic meters the West via pipelines across its territory. Russian Prime Minister Viktor Chernomyrdin discussed the debt problem with Ukraine's leadership last week in Kyiv, but there was no conclusive agreement.
Pressure is growing on Ukraine to pay debts and to increase its cash payments. So far the lion's share of repayments has been made in Ukrainian-produced steel pipes, energy equipment, chemicals and agriculture products. Nemtsov said on Tuesday Moscow was losing patience with Ukraine over non-payments for gas.
'If you won't pay, you won't be supplied,' Nemtsov said during a meeting with energy officials. 'It should be established once and forever. If there's no money, give up your property,' he said.
Russian Deputy Prime Minister Yakov Urinson said in Kyiv on Tuesday that Russia would participate widely in the privatization of Ukraine's energy businesses. Alla Yeremenko, energy commentator for the weekly Zerkalo Nedely newspaper, said Russian energy businesses already have claims on six of Ukraine's oil refineries, on underground gas storage, pipelines and steel mills. Reformist Parliamentary Deputy Serhy Teryokhin warned: 'There's a threat to Ukraine's national security if our economy's diamonds are handed to the Kremlin's New Russians (businessmen).'
But Ukraine has few alternative suppliers of energy. On Tuesday, Latvian Prime Minister Guntars Krasts said during a visit to Kyiv that Ukraine could buy North Sea gas from Norway.
'Ukraine and Latvia are in the same position,' Krasts told Interfax news agency. 'Gazprom as the sole gas supplier to the Baltic states can never be fully reliable.' He added that a feasibility study on the construction and finance of a pipeline from Scandinavia to the Baltic states and Poland, with a possible extension to Ukraine, would be completed in two years.
'The Norwegian option is a possibility – perhaps through a deal with Germany, which imports gas from Norway,' said Volodymyr Maksymiv, a senior official at the state-owned Ukrgazprom company.
On Tuesday, the Central Asian state of Turkmenistan and Anglo-Dutch oil giant Royal Dutch/Shell signed a memorandum of understanding to build a $4 billion gas pipeline to Turkey and on to Europe via Iran.
Last month Turkmen leader Saparmurat Niyazov told Ukrainian President Leonid Kuchma that Kyiv could buy gas from Turkmenistan via this pipeline – especially while the issue of transit via Russia remains unresolved.
'The southern route is quite realistic for Ukraine to get Turkmen gas but it's still too far in the future,' said Yeremenko.
'But Ukraine needs alternatives, especially due to the need to survive politically during the next two years,' she added, referring to parliamentary elections in March and presidential elections next year.
Kyiv and Ashgabad signed a deal on annual supplies of 20 billion cubic meters from Turkmenistan, but Russian gas monopoly Gazprom continues to block its transit through the shortest route, offering one of double the length. Kuchma, perhaps trying to paper over Ukraine's wish to have at least two gas sources, said during a meeting with Chernomyrdin that Ukraine wanted to import Turkmen gas because Gazprom did not have enough gas to satisfy all its demands.
Chernomyrdin responded by saying: 'If Ukraine needs gas, we in Russia will always find it. Russia is provided with these resources for the next 100 years.'
