Ukrainian Premier Says New Proposals for Gas Talks to Be Ready Soon

Gas talks continue at the level of experts because both the fuel and energy minister and the head of the Naftohaz Ukrayiny state oil and gas company were recalled to Kiev for consultations after Russia rejected all 12 points of Ukraine’s proposals to settle the gas crisis, Ukrainian Prime Minister Yuriy Yekhanurov has said. He was speaking live on the Ukrainian private Radio Era. Yekhanurov promised to come up with new proposals tonight. He said that the stationing of the Russian Black Sea Fleet in Ukraine should not be a bargaining chip in the gas row. However, he added that the Russian Black Sea Fleet should observe rent procedures. Yekhanurov reiterated that Ukraine would not review the agreement on the Black Sea Fleet’s stationing. The following is an excerpt from Yekhanurov’s interview broadcast by Ukrainian private radio Era on 30 December. Subheadings have been inserted editorially:

[Presenter] Yuriy Ivanovych, gas is of course the most burning issue now. It seems the Russian president named Russia’s last proposal – to give Ukraine a loan to pay for Russian gas. We already have the president’s reaction that we don’t need this loan. This will be Ukraine’s official position, is that right?

[Yekhanurov] Of course. Do you think that the Ukrainian government is not the president’s team?

[Passage omitted: Putin's statements in Moscow]

New proposals remain secret

[Yekhanurov] At 2230 [2030 gmt yesterday] we received a new version of the draft agreement from Gazprom and a new version of the protocol between the two government [on gas prices]. We left a working group there, which is working now. Fuel and Energy Minister Ivan Plachkov and the head of Naftohaz Ukrayiny, Oleksiy Ivchenko, have returned for consultations. They reported to me today before 0800 [0600 gmt]. They reported on the current situation. At 1000 [0800 gmt] they will report to the Ukrainian president and then we expect reports from Moscow, where work is continuing. We will produce our view on the situation and our version of the agreement and the intergovernmental protocol in the evening. Unfortunately, Russia rejected all 12 points proposed by Ukraine.

[Presenter] What are Gazprom’s proposals in the new draft protocol?

[Yekhanurov] I would not like to talk about it now. We are behaving very correctly regarding Russia’s proposals. The only new thing that appeared is that Mr Khristenko [Russian industry and energy minister] said they would like to replace Turkmen gas with Russian gas. We agreed with Turkmenistan on a much lower price and the amounts that satisfy us completely. I brought here a map of gas pipelines and documents proving that we have agreed with Turkmenistan. I am glad that the Turkmen president held talks with us very pragmatically. Here is an additional agreement to the contract on selling gas, which was signed between Turkmengaz [gas company] and Naftohaz Ukrayiny [state oil and gas company] on 22 December 2005. I can tell you the amounts and the president will announce the price tonight. The Turkmen president said that 40bn cu.m. of gas will be supplied to Ukraine next year. Of them, 11.35bn cu.m. will be supplied in the first quarter and the same amount in the fourth quarter. In spring and summer we will receive 8.65bn cu.m. each quarter.

[Presenter] What are the terms on which Russia proposed replacing Turkmen gas with its own?

[Yekhanurov] Of course, at 230 dollars [per 1,000 cu.m.].

[Presenter] Why was this proposal mentioned in the first place?

[Yekhanurov] I think people just want to make money.

Hopes Russia transports Turkmen gas

[Presenter] Will the facts that Ukraine signed a contract to buy Turkmen gas and then Russia signed a contract with this country hamper gas supplies to Ukraine in any way?

[Yekhanurov] Well, we have agreements on gas transit and I think everything will be done in accordance with international norms. I would like us to go on from declarations to real work. Ukraine is carefully preparing for expensive gas. We must reduce its consumption where it is economically unacceptable. We have discussed all the issues with the main Ukrainian gas consumers, steel and chemical plants. A meeting at the Industrial Policy Ministry has been held. Everyone knows well what fate awaits them and what should they be prepared for. There is no panic. We have a calm and business- like approach to these problems. We also held meetings with other gas consumers. If your listeners are interested I can mention all the figures. I have taken this book with me to tell you about the gas balance.

Gas balance details

[Presenter] Figures are too difficult to grasp over the radio.

[Yekhanurov] I mean that we want to have 76bn cu.m. of gas next year. Of them, 17.7bn cu.m. are for population. For comparison, Ukraine extracts 20bn cu.m. of its own gas. When I visited Poltava Region we talked about the supplies of Ukrainian gas and its extraction. I would like to say that we are making serious steps to increase domestic gas extraction. We have announced a tender to extract gas on the Black Sea shelf and the Azov Sea shelf. The amount of work there is quite big. We should extract much more gas in Sumy, Poltava and Kharkiv regions.

[Presenter] Yuriy Ivanovych, despite the fact that talks are still continuing, Gazprom today reiterated that they are ready to switch off gas for Ukraine at 1000 in the morning [on 1 January]. Is it possible? What will happen on 1 January.

[Yekhanurov] First, they should understand that there are agreements. I would like to see how they will observe these accords. We will issue relevant government declarations. I will sign a resolution today, which says that we will not consider Russian gas after 1 January as contraband. Our Interior Minister Yuriy Lutsenko came to me and asked what is the status of gas beginning from 0000 on 1 January. If there is no agreement it will be contraband gas, he said. I said we will sign a resolution. Russia has already done this on their end and their customs service will not consider it contraband. So we will give this gas the status of a commodity. Second, we will offer Russia gas routes, look at this fine map here – it explains the routes of Russian gas transit on Ukrainian territory. I am sure we will agree. Russian gas transit is expensive for us. Our transport company spends a lot of money and resources. We should treat these things rationally.

[Presenter] So, you hope that Ukraine and Russia will come to an agreement by the New Year.

[Yekhanurov] First, we have to come to an agreement. Second, I wouldn’t like to oversimplify the situation. But I want to say that we are ready for any emergencies. The main thing I would like to say is that the population will not feel anything. Households will receive gas as usual, because this is low-pressure pipelines. We have enough gas for the population. We have enough experienced specialists who will work and perform their duties. And of course, it is out of the question that the prime minister, the energy minister or the head of Naftohaz Ukrayina go on leave. We will be at our offices.

Ukraine to observe Black Sea Fleet accord

[Presenter] Russia uses various means to put pressure on Ukraine, including gas and a ban on Ukrainian meat. We also have means to influence Russia, for instance the Black Sea Fleet in Crimea.

[Yekhanurov] You know, I would like not to look for means to pinch our neighbour. I am categorically against putting the question like this. I think that trade relations with Russia are developing quite well and we will do everything to continue this. Russia means 22 per cent of our export and 28 per cent of our import. We should understand that this is very important for many consumers in Ukraine and for many consumers in Russia. There are some problems now. Russia is putting pressure on us, introducing quotas on pipes and buying Japanese instead. So, there is certain discrimination. Of course, our Economics Ministry is working on this too. As regards the Black Sea Fleet, I would not like to bring politics there. There is no politics. We simply don’t want anyone, either Ukrainians or Russians, to steal using Ukrainian state property. There is land that we rented to the Russian Black Sea Fleet. The Defence Ministry is in charge of this. We defined this by the latest government resolution. All the other land that the Black Sea Fleet is occupying now is in the remit of our State Property Fund. We want Russia to pay for what it does not pay now. If it does not want to pay then they don’t have the right to stay there. We don’t object. If the Black Sea Fleet units are stationed there then let them stay. Second is sublease. It also looks bad. There are about 146 hectares of land the status of which is unclear. So, the State Property Fund should restore order in this issue.

[Presenter] When will the fund’s representatives be able to get to the spot and check them?

[Yekhanurov] We have agreed on joint inspections. Ukraine’s position has been presented and I think there will be no problems there. If there are some problems the media will know everything immediately.

[Presenter] How would you comment on Russian Defence Minister Igor Ivanov’s statement that the treaty on the stationing of the Black Sea Fleet in Crimea also includes a provision on Ukraine’s borders. To review the treaty would be fatal, he said.

[Yekhanurov] We are not going to review any terms. We don’t have any questions. Well, he is a military man and they have their own terminology. Let this be on his conscience. There is no need to threaten anyone. We are not reviewing any terms. We are saying only one thing – according to the terms, there is land rented by the Russian Black Sea Fleet. We want order to be established there. I think Russia also wants order there.

[Passage omitted: border delimitation issues, CIS, cooperation with parliament, questions from listeners]

Ukraine not to give up its gas pipeline

[Presenter] Yuriy Ivanovych, let us talk about the loan. Didn’t Vladimir Putin say when he offered the loan what could be a deposit for a respectable international bank.

[Yekhanurov] You know, Vladimir Vladimirovich is an experienced politician and knows what he says. He said, on guarantees from a first-class bank. As if the state would have nothing to do here. A first-class bank will immediately say, please give us the gas transportation system. This will not happen. Our President Viktor Yushchenko clearly answered this yesterday. We don’t trade in what we can’t trade. There is a Ukrainian law saying that the gas transportation system cannot be an object of haggling, privatization or anything else. This is our national heritage, I would say. We cannot touch it, or even talk about that.

[Passage omitted: electricity rates to go up, a gas deal with Turkmenistan signed]