YALTA, Ukraine – Ukraine's leaders ramped up their public pressure campaign on Russia on Sept. 16 at the Yalta European Strategy forum, pushing for a new contract on Russian gas deliveries with a lower price and a reduction in volumes.
President Victor Yanukovych said in his address that Ukraine has “a program” to reduce gas imports by 5 billion cubic meters per year.
He said Ukraine has sent a request to Russia state company Gazprom to buy 27 billion cubic meters of gas, down from this year’s planned purchase of 33 billion cubic meters of gas. “We’re also increasing our domestic production,” he told the conference.
However, the current contract with Russia, signed in 2009 by the then Prime Minister Yulia Tymoshenko, introduced a take-or-pay system, under which Ukraine has to buy out 40 billion cubic meters of Russia’s gas per year, or pay for it if its internal demand falls short of the target. Tymoshenko is currently on trial for signing this contract.
Russia’s Gazprom said earlier this month that even if Ukraine wants to import less, it will still have to pay.
Ukraine’s government has for months been trying to reduce the price it pays for crucial Russian gas deliveries. But Kyiv has refused to agree to economic and political concessions demanded by Moscow in order to receive a discount.
Anders Aslund, an economist at the Washington-based Peterson Institute, told the president that Ukraine has so far failed to redirect its attention to energy efficiency, which is a real issue in Ukraine. He said greater energy efficiency would cut the nation’s dependence on Russian gas imports.
Andriy Klyuyev, Ukraine’s first deputy prime minister, told the Kyiv Post that it’s already happening. Big industry is “intensively” introducing new technologies to become more energy-efficient, he said, without elaborating.
He said, however, that the government is reviewing the structure of gas consumption by households and the public utility sector. He said that the nation’s individual households use 20 billion cubic meters of gas per year, and this demand is satisfied by domestic production, which roughly equals or exceeds this figure.
Klyuev said the government is currently inspecting public utilities companies and is discovering that many of them “don’t even have gas meters.” He said such companies “will only receive licenses if they install meters.”
He said public utility sector uses gas imported from Russia, the price of which is set to grow to nearly $400 per 1,000 cubic meters this year. Currently Ukraine pays $355for gas. President Yanukovych said his government will continue shielding the population from further price rises until the living standings get higher.
“We shall do it, but in some time,” Yanukovych said.
President Yanukovych is set to visit Russia on Sept. 24 to continue negotiating a better gas price. But Gazprom chief executive Alexey Miller said earlier this month that lowering Russian gas prices for Ukraine will only happen in case of merger of Gazprom and Naftogaz, the national gas monopolies. The Ukrainian leaders have repeatedly said they are not considering this option.
A government source told the Kyiv Post that it is hoping a new price in the range of $190-$210 per 1,000 cubic meters will be agreed in exchange for resurrecting an earlier idea to form a three-way consortium of Ukraine, Russia and the European Union to upgrade Ukraine’s transit pipeline, possibly including a sale to Russia of a stake in the network.
The source said he also hoped for a significant increase in the transit fee.
If no agreement can be reached, however, Ukraine has threatened to sue Russia in an international court over the contract, which it considers unfair.
Germany last month challenged its contract with Gazprom in court to revise the formula for price calculation. Earlier,Italy’s Edison forced Gazprom to cut the gas price significantly.
Kyiv Post editor Katya Gorchinskaya can be reached at [email protected]
