Russia, Ukraine resolve gas dispute

Russia, Ukraine resolve gas dispute
AFP
By Marina Lapenkova AFP - Tuesday, February 12 07:24 pm

MOSCOW (AFP) - Russia and Ukraine on Tuesday reached a deal to resolve a row over gas debt in which energy giant Gazprom had threatened to cut supplies to Ukraine, Russian President Vladimir Putin said.

"Gazprom is satisfied with the offers made by the Ukrainian side," Putin said. "We have agreed on the principles of cooperation."

"We agreed that Ukraine will pay back the debt" accumulated in 2007, Ukrainian President Viktor Yushchenko said.

The presidents spoke to journalists after negotiations ended within minutes of a 6:00 pm (1500 GMT) deadline set by Gazprom for Kiev to pay a claimed debt of 1.5 billion dollars (one billion euros) or face a partial cut in energy supplies.

Putin said he was "sorry" about the row between the two countries and that they had "come up with a common plan for working in the near future."

Under the deal, Ukraine will begin to pay off its debts on Thursday and two controversial intermediary gas trading companies will be replaced, Gazprom said in a statement.

"Deliveries of gas to Ukraine will be carried out at full volume," the statement said.

Change to the murky system of intermediaries by which Ukraine pays for gas imported from Russia and via Russia from Central Asia had been a key demand by Ukrainian Prime Minister Yulia Tymoshenko.

RosUkrEnergo and UkrGazEnergo, which have been at the centre of repeated corruption allegations in the Russian press, will be replaced by two firms jointly owned by Gazprom and Ukrainian state energy firm Naftogaz, the statement said.

The dispute echoed a gas pricing row in 2006 that led to gas disruptions across Europe after Gazprom cut all supplies to Ukraine, the main transit route to the European Union.

This time Gazprom said the cut-off would affect only a portion of supplies to Ukraine and would have no impact on deliveries transiting Ukraine to the European Union.

The EU welcomed the deal, expressing hope it would help avoid future problems.

"The commission expects that this solution will establish the basis for a stable and solid bilateral energy relationship," EU Energy Commissioner Andris Piebalgs said in a statement.

Another fraught issue on the agenda between Putin and Yushchenko was Ukraine's push for NATO membership.

Kiev hopes NATO will approve a Membership Action Plan for Ukraine -- a formal step towards membership -- at the alliance's Bucharest summit on April 2-4. Moscow sees the expansion of NATO, as well as the deployment of a US anti-missile shield in central Europe, as a threat to Russian security.

Putin said that Russia would not interfere in Ukraine's affairs, but insisted that Moscow would have to respond if NATO bases or anti-missile systems were placed there.

"I draw your attention to the consequences that would follow," Putin said. "It is terrible to even think that in response to this.... Russia cannot theoretically exclude aiming our offensive missile systems at Ukraine."

Also reflecting these tensions, the Kremlin said Putin had signed a law that reduces military cooperation, suspending the use of two radars in Ukraine by Russian forces.

Russian newspapers noted Ukraine had acquired a bargaining chip in relations with Moscow by receiving an invitation to join the World Trade Organisation.

Ukrainian membership will give Kiev influence over Moscow's own painfully drawn-out negotiations to join the global trade club, state daily Rossiiskaya Gazeta noted.

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Russia breaks ties with gas middleman

By Catherine Belton in Moscow and Roman Olearchyk in London

Published: February 12 2008 20:29 | Last updated: February 12 2008 20:29

Russia and Ukraine on Tuesday agreed to cut out a controversial Swiss-registered trading company at the heart of a dispute between the two nations, as Kiev and Moscow settled a broader deal over natural gas debts.

RosUkrEnergo – 50 per cent owned by Gazprom, the Russian state gas monopoly, and 50 per cent by two Ukrainian businessmen – has been a bone of contention between the two capitals. It won a monopoly on Gazprom’s supplies to Ukraine following a standoff over prices in 2006.

Yulia Tymoshenko, Ukraine’s prime minister, had vowed to eliminate the trader as a middleman, calling it a “criminal canker”. But Gazprom had warned its replacement could lead to an increase in gas prices.

Vladimir Putin, Russia’s president, and Viktor Yushchenko, his Ukrainian counterpart, emerged from talks in the Kremlin on Tuesday to announce they had negotiated settlement of more than $1bn (€690m, £513m) in debts Gazprom claims is owed by Kiev.

The two leaders agreed the deal just minutes before a deadline which would have seen Gazprom reducing supplies to Ukraine, a threat that had renewed fears in Europe that its supplies could be affected.

Alexei Miller, Gazprom’s chief executive, said last night that a deal had been clinched to axe RosUkrEnergo and replace it with a joint venture owned directly by Gazprom and Ukraine’s energy monopoly, Naftogaz Ukrainy.

A spokesman said the new entity would supply gas from central Asia and Russia to Ukraine on the same terms and prices as RosUkrEnergo for 2008. He could not say when the joint venture would be formed.

The trader had looked to be threatened after Semyon Mogilevich, suspected by Ukrainian politicians to be connected to the regional gas business, was arrested in the Russian capital last month on charges of tax evasion related to a Moscow perfume retailer. Political analysts in Moscow have suggested his arrest could have been connected to a shake-up in the Ukraine-Russia gas trade.

Ukraine’s security service had investigated RosUkrEnergo for possible ties to Mr Mogilevich in 2006. The investigation was never completed.

RosUkrEnergo, Dmytro Firtash and Ivan Fursin, who together own half the trader, have denied any ties to Mr Mogilevich. A lawyer for Mr Mogilevich has denied his client has any links to the gas business.

A spokesperson for Mr Firtash declined to comment last night on the news the trader was no longer the middleman. A spokesman for RosUkrEnergo also declined to comment.