Russia’s Gas Lighter to Ukraine, Says Trend Capital Commentator
Azerbaijan, Baku, 4 October / Trend corr. S.Aliyev/ Ukraine and Russia achieved an outline agreement on gas supply for 2009. Though, the final cost of the gas has not yet been coordinated, the sides have signed a memorandum on energy cooperation.
The memorandum envisages smooth transmission to market values - within 3 years. Furthermore, gas will be supplied to Ukraine without brokers (RosUkrEnergo). Thus, supply issues will be directly coordinated between the Naftogaz of Ukraine and Russia's Gazprom.
Fast achievement of relatively easy and profitable for Ukraine gas agreement with Russia seems a bit strange, particularly on the background of the difficulties in the relations between the two countries resulting from supply of Ukrainian military equipment to Georgia. Moreover, the flight of Ukrainian Prime Minister Yilia Timoshenko to Moscow in spite of the airplane-related problems (President Yushchenko used the flight of Prime Minister. Timoshenko left for Russia by a charter flight accompanied with a delegation of 8 people) may serve as circumstantial evidence of firm belief to achieve the gas agreement. Unambiguous is only one thing - Timoshenko will improve her political rating, particularly taking into consideration the current political crisis in Ukraine.
It is difficult to forecast at the moment Russia's gas prices for next year. Moscow sells Central Asian gas to Kiev at $179.5 per 1,000 cu m. Whilst gas prices for Europe have exceeded $500 per 1,000 cu m.
In 2007, RosUkrEnergo supplied 38bln cu m of Turkmenistan, 9bln cu m of Uzbekistan and 8bln cu m of Kazakhstan gas to Ukraine and re-exported about 10bln cu m of Central Asian gas. According to the agreement signed at the end of 2007, RosUkrEnergo will supply a total of 55bln cu m of Central Asian gas to Ukraine in 2008.
Meanwhile, cost of the Central Asian gas, which Gazprom purchases from Uzbekistan, Turkmenistan and Kazakhstan, is expected to dramatically hike next year on. In conformity with the agreement between Gazprom and the three countries, they will sell the natural gas at European prices from 2009 on. Thus, the final cost of the 'blue fuel' for Ukraine may be set after the prices for Central Asian gas have been specified.
Now, Ukraine directly depends on the gas supply from Russia. Anyway, Kiev still has leverage on Moscow, which is that Ukraine acts as a transit country for supply of Russian gas to Europe. However, after Russia implements such projects as South Stream and North Stream, the efficacy of the leverage will dramatically fall.
Ukraine has many times stated its wish to diversify the energy supply resources. The White Stream pipe project was suggested as one of the variants.
The route was suggested by Ukrainian Prime Minister Yulia Timoshenko during her visit to Brussels in January. The route envisages pipeline transportation of gas from Azerbaijan to Georgia's Supsa port and onwards through the bed of the Black Sea via Crimea to the European Union.
According to experts, Kiev will lack funds to implement the project. They doubt EU and USA may stop political support to EU countries' Nabucco project in favour of Ukraine's suggestion (White Stream), which implementation is technically complicated.
"Implementation of the White Stream project requires estimation of its economic constituents, security and environmental impact. Gas supply route must be determined, for implementation of the project requires construction of underwater pipelines, including that via the floor of the Black Sea," Azerbaijan's Minister for Industry and Energy Natig Aliyev said before.
According to Aliyev, Azerbaijan possesses enough gas to transport it via the route and therefore the White Stream may be implemented. That can take place after opening of new gas fields in Azerbaijan, development of gas reserves in the deep section of the Azeri-Chirag-Gunashli fields and other sources.
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