MOSCOW/KIEV, Dec 23 (Reuters) - Russia and Ukraine are trading accusations daily in their fourth high-profile gas dispute in four years, which threatens to disrupt gas supplies to Europe from Jan 1. as it did in 2006.
While the dispute may seem more of the same on the surface, a number of factors show it can follow a different scenario this year.
Both countries feel the dire effects of the global financial crisis on their markets and economies. Ukraine has nevertheless accumulated in the past months huge gas stockpiles to give it a strong hand to ride out any storm.
HOW BIG IS THE DEBT?
The two sides traditionally disagree over the debt’s size.
Gazprom says it will cut supplies if Ukraine’s state firm Naftogaz does not repay $2 billion by Dec. 31. It says Europe could yet again suffer from the dispute as Kiev could start siphoning off gas from transit pipelines.
Ukraine has said it paid $800 million already and would pay another $200 million soon. A presidential aide said Naftogaz owes $814 million to Russia and guaranteed transit to Europe. Naftogaz says it pays some $700 million for a month’s supply at the end of the following month. It says Gazprom’s debt figure includes supplies to the end of the year, when in fact December would be paid in January and November’s debt is not due yet.
CAN NAFTOGAZ PAY?
Naftogaz on Tuesday agreed on a $840 million loan from Ukraine’s state savings bank, Oshchadbank. And according to the latest budget amendments, Naftogaz will get 4.2 billion hryvnias ($530 million) in aid.
Ukraine cannot use its $17 billion IMF loan directly to pay the gas debt. The $4.5 billion tranche it has received to support its economy goes to central bank reserves, and spending of these are limited by IMF conditions.
Gazprom has offered the option of redeeming debt against the transit fees Gazprom would otherwise pay Ukraine next year. Ukrainian officials have rejected this offer. The transit fees are one of the few direct levers Kiev holds in gas supplies.
Ukraine’s debt was rising as high as $4 billion during previous dispute, but it has always been repaid or restructured.
CAN UKRAINE SURVIVE ON STOCKS?
“We doubt that Gazprom would stop exports to Ukraine from Jan. 1, primarily to preserve its somewhat tarnished image of a reliable gas exporter,” Troika Dialog analysts said.
But there is more than Russia’s reputation at stake — it needs export revenues more than ever, as oil prices fall, the rouble depreciates and the government spends its cash pile on supporting the economy.
And Russian industry will suffer through a lack of funds if Ukraine does not pay up, Gazprom said on Tuesday.
If supplies are cut Ukraine has plenty of stored gas. Naftogaz says it has 17 billion cubic metres in storage, 22 percent of Ukraine’s annual consumption.
It says intermediary company RosUkrEnergo has a further 11 bcm but threatens it would not be able to guarantee smooth gas transit to Europe should Russia cut supplies.
On top of that, Naftogaz says Ukraine simply needs less gas at the moment as the economic crisis has reduced industrial energy consumption by 25 percent.
“So we are not in a crisis situation here. But even if the weather continues to be not very cold in January, it’s the symbolic effect,” said Jonathan Stern, director of gas research at the Oxford Institute of Energy Studies.
WHERE DOES THE MIDDLEMAN GO?
Ukraine now pays $179.5 per 1,000 cubic metres (tcm), up from $50 in 2005. After threatening to more than double the price to $400, Gazprom officials have said $250-$300 may be a more appropriate figure as oil prices fall.
Ukrainian officials have said $100 per tcm would be more appropriate although European prices are now at $500.
“Ukraine’s economy is in dire straits. In the interests of economics and politics, Russia would do well to compromise on next year’s gas price to Ukraine,” said James Beadle, Chief Investment Strategist at Pilgrim Asset Management.
Ukraine could pay a lower price if it offers a larger slice of its domestic market to Gazprom, which already supplies a seventh of the market directly, Ukrainian media said.
Keeping RosUkrEnergo in bilateral gas trade could also help.
Gazprom’s critics say the presence of RosUkrEnergo raises questions over property redistribution, while Gazprom says it needs the firm – its venture with two Ukrainian businessmen – to manage supplies, which come from different sources.
“Sometimes I have a feeling the spat is all about keeping RosUkrEnergo in place,” said a Western diplomatic source. (Writing by Dmitry Zhdannikov and Sabina Zawadzki, editing by Anthony Barker)
