Ukraine's gas transit network and gas storage facilities are worth $26-$29 billion based on Baker Tilly’s assessments, reported Kommersant daily newspaper. The paper quoted an anonymous energy ministry official as the source of the information.
A senior government source familiar with the audit
told Kyiv Post the evaluation was conducted to serve “as a basis for any
negotiations.”
The figure was leaked by government officials just
days after the weekend meeting of Presidents Viktor Yanukovych of
Ukraine and Vladimir Putin of Russia. Very few details from their talks have
emerged, but media reported the fate of the Ukrainian gas transit network was a
central theme of the negotiations.
Ukraine’s
strategic gas transit network is a crucial element of Europe’s gas
infrastructure. It pumps more than 80 billion cubic meters of Russian gas to
Europe out of a total supply of 140 billion cubic meters. The pipelines can
also be reversed to pump gas from Europe back into Ukraine, which the nation
has increasingly used to reduce dependence on expensive Russian gas.
Built
in the Soviet era, Ukraine’s GTS and storage facilities require billions of dollars
in upgrades. The network also remains one of Ukraine’s few remaining bargaining
chips with Russia in ongoing negotiations to reduce gas prices. Ukraine
currently pays around $410 per 1,000 cubic meters – one of the highest prices
in Europe despite a $100 discount it already receives.
Ukraine has
been unsuccessfully trying to reduce the gas price to $270 per 1,000 cubic
meters in exchange for conceding partial management of the GTS. The government
even tabled a bill in parliament recently that would allow the creation of such
a consortium, but it’s yet to be debated.
Russia had been pressuring Ukraine into joining the
Customs Union of Russia, Belarus and Kazakhstan in exchange for favorable gas
prices. It has also insisted that Ukraine should quit the Third Energy Package,
a European initiative designed to liberalize the gas market.
But Andriy Honcharuk, the president’s adviser on
economic issues, said on May 27 that Ukraine’s government separates the issues
of Customs Union membership from the fate of the gas transit network.
“As far as the connection goes of acquiring the status
of an observer in the Customs Union and certain concessions in the further
development of the negotiation process around the gas transit network, I would
like to state that these processes are not at all connected. These two
processes are moving in parallel,” Honcharuk said.
Ukraine has insisted on acquiring an observer status
in the Customs Union, which would allow the nation to take part in debates and
negotiations, but would give it no voting rights.
Customs Union documents in addition would not have any
legally binding status in Ukraine. Some Ukrainian media have speculated that
President Yanukovych might sign up for observer status in the Customs Union as
soon as May 29, at a meeting of member countries in Astana, Kazakhstan.
The fate of the gas transit network will take longer
to decide. There is a political consensus in Ukraine that the network should
remain under state ownership, but that’s where it ends. Ukraine has been
negotiating a potential management consortium with Russia and possibly Europe,
but there is no deal in sight.
In February, President Viktor Yanukovych said Ukraine
will not sell the pipeline network, which brings in $3.5 billion in transit
fees annually.
Some analysts suggest that Russia would like to either
buy it, or enter a two-way deal with Ukraine. Tim Ash, a London-based analyst
for Bloomberg, in his note on May 28 analyzing the Baker Tilly evaluation
figures, said that Russia clearly wants ownership or control of Ukraine’s
pipeline, and “I think he will pay top dollar, if he (Putin) actually thinks it
is on sale, in a legally binding way.”
Kyiv
Post editor Katya Gorchinskaya can be reached at gorchinskaya@kyivpost.com
