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Friday, January 23, 2009

Tymoshenko Says $228.8

PM Yulia Tymoshenko:
As of today, we’ve already managed, using the formulas and considering the discount, to calculate the exact price of natural gas for Ukrainian consumers in 2009. The price, one that will be effective not on a quarterly basis and subject to change, but one that will be uniform for the entire year, starting January 1, 2009 — this gas price, meaning, as you understand, the price at the border, will be $228.8 per 1,000 cubic meters. For comparison shopping, you’ve been provided with a table where you can match the natural gas prices in friendly Poland against the natural gas prices that will be in Ukraine. At the same time, the transit rate will remain throughout the year 2009 at $1.7 per 1,000 cubic meters per 100 kilometers. The rate will remain [unchanged] because an agreement has been reached regarding a special rate for technical gas that is used in transit pumping. Said special rate for the volumes of gas to be transited is $153.9 per 1,000 cubic meters of gas. The $1.7 rate is justified given the discount rate for the technical gas, and it is a rate that makes it possible for the gas pipeline system to operate normally.

Gazprom tells a slightly different story.

It proceeds from a base price of $450/mcm as stipulated in the 10-year contract signed between Ukraine and Russia. (If that’s what EU countries pay — transit via Ukraine, Slovakia and the Czech Republic included — then why should those transit costs be included in the base price for Ukraine?)

Ok, the price will be revised quarterly depending on the 9-month average price of diesel fuel and black oil. In Q1 2009, Ukraine will get 20% off the base price of $450.

By contrast, throughout the year 2009, Ukraine will transit 120 bcm of Russian gas to the EU, at the 2008 transit rate of $1.7/mcm/100 km. (EU countries charge at least twice as much, don't they?)

Starting with 2010, Ukraine and Russia will fully commit to European pricing, the agreement says. (But why does Alexander Medvedev of Gazprom already say that the 2010 transit rate will be $2.4-2.6?)

So how does Ukraine benefit from this formula of bizarre pricing and asymmetric discounts?

Watch Tymoshenko’s Wednesday interview on Channel 1+1.

In the interview, she describes her gas deal with Putin as the best in Europe, links RosUkrEnergo to the Party of Regions (plus Yushchenko), and refutes the possibility of Ukraine’s default.

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elmer said...

Has anyone seen the actual gas and transit agreements?

They are government documents, and they should be public.

Tymo is being a bit disingenuous - well, OK, dishonest - here.

I have no doubt that what she has done is to calculate an average price over 2009.

Given that the price is to be revised quarterly, I don't see how she can honestly say that there is simply "one price."

If she had said that this was forecast to be an average price over the coming year, I would believe her.

I have no doubt that she is taking into account fewer purchases of rooshan gas during the first quarter, based on Ukraine's gas reserves in storage, which she herself publicly announced as a bargaining chip during the gas war.

Yushchenko did the same thing with his $179 price - it amounts to political posturing, because it did not take into account RosUkrEnergo's 20% cut for Ukrainian and rooshan/Kremlin/Gazprom slush funds.

elmer said...

Interesting thing about that interview.

Tymo says that Ukraine will not be paying quarterly payments, only annual payments.

And that if there is a default,then Ukraine will have to pay in advance.

She also dodged the interviewer's question about when the agreements will appear in public.

All she said was that they are signed.

She also said that Ukraine is not in any danger of defaulting on its government debt, and that other countries are in much worse shape.

I wonder if she has looked at the ratings of the financial rating agencies lately?

Taras said...

You’re absolutely right about the public’s right to know!

As of today, the full text of the agreement she signed remains undisclosed.

In the meantime, her math continues contradicting statements made by Gazprom and its subsidiaries.

On Friday, she said this:

I think that this year this company [Gazpromzbut Ukraine] will not sell a single cubic meter of gas on Ukraine’s domestic market, because they have no incentive. NAK Naftogaz Ukrainy sells without any markups and, in fact, sells gas at cost to industry, and therefore any domestic company…would not be competitive in the domestic market. Absent the profit motive, they [Gazpromzbut Ukraine] had no intention to do business.

(The notion that Naftogaz sells gas at cost strikes me as sensational in and of itself. But that’s beside the point.)

This year, Gazpromuzbut Ukraine plans to sell 6 bcm of gas to Ukrainian industry, or 25% of the forecast industry demand, CEO Anatoliy Podmyshalsky countered on Saturday. Gazpromuzbut Ukraine will sell its gas at prices set by Naftogaz. “There will be no other prices,” Podmyshalsky emphasized.

So there she is, telling fairy tales and putting blinders on the public.

It reminds me of how she took pains to dismiss the notion of economic crisis as ‘scaremongering’ in October.

elmer said...

Taras, as between Tymo and Gazprom, in the context of credibility, I believe Tymo far more than Gazprom.

In fact, I wouldn't believe Gazputkinprom at all.

Putking and Gazprom committed a colossal blunder simply because Putkin, with the Napoleon complex, was trying to beat his chest and show rooshans how powerful he is and how roosha deals with its "enemies" - which happens to be the entire world, according to roosha's self-made view.

Soooo - roosha/Gazprom loses over $2 billion due to the gas war - just so stupid rooskies can say "yep, we are powerful rooshans, we really learned 'em, we brought Europe and Ukraine to their knees."

Strange kind of "victory," if you ask me.

Now, stranger still, Gazprom wants to sue Ukraine for the losses.

I don't know what kind of drugs those rooskies are on, but they are sure powerful.

Taras said...

Gazprom wants to sue Ukraine? Really? Didn't Tymoshenko assure us that she and Putin had agreed that neither side would sue the other?

You can hear it 3:26 into this interview.