Putin: Gas won't go out in Ukraine and Russia during New Year celebrations

Russian Prime Minister Vladimir Putin pledges that Russia, Ukraine and European consumers of Russian gas will see the New Year in without upheavals. He was speaking in the wake of his talks with his Ukrainian counterpart Julia Timoshenko in Yalta. The parties took up gas contracts for next year and were content at the agreements reached.

First, Vladimir Putin calmed down his Ukrainian counterparts by reiterating that no punitive sanctions would be imposed for gas under-purchasing. GAZPROM and Naftogaz Ukrayiny interact on the ‘take and pay’ principle. In other words, every year the two energy companies determine the minimal amounts of gas that the customer will buy. If the amount of gas acquired proves less than that, the under-consumed amount should be partially paid for. In 2009 Ukraine bought less than it said it would. But given the neighbouring country’s economic plight, Moscow decided not to impose punitive sanctions on Kiev, says Vladimir Putin, and elaborates.

"We are perfectly aware, Vladimir Putin says, that the consumption amount has dropped. Therefore, given special relations between Russia and Ukraine, Moscow has made a decision not to impose any punitive sanctions. To avoid a situation that would generate such sanctions next year we have just decided that GAZPROM and Naftogaz Ukrayiny will agree new amounts of gas supplies to Ukraine for 2010 in realigning the earlier agreed figures. As long as no excessive amount is set down in a contract, there will be no sanctions. This is a very simple solution that’s acceptable to all parties".

Also, in keeping with the contract that was signed earlier this year all benefits and discounts are seen as null and void, the benefits and discounts that have been in effect in Russian-Ukrainian energy relations. This will cause Russia to pay 60% more for its gas transit via Ukraine to Europe, while Ukraine will for the first time ever pay a market price for the Russian gas acquired, or 20% more than the currently effective price. Accoridng to Julia Timoshenko, Ukraine will now have a standard European gas contract, which is evidence of the country’s sovereignty and independence. But some forces in Ukraine, she said, are opposed to the country’s integration into market relations.

"Many high-ranking politicians dislike the contracts in question, Julia Timoshenko says, because throughout the previous years the gas market was run in keeping with a mega-corruption model. Billions of dollars were channelled to mediators, rather than to the state budget, to government-run companies. My government removed the mediators in question early this year, so many in Ukraine criticize the new contracts, since these prevent them from getting big money any more".

Julia Timoshenko has thus unambiguously pointed at Ukraine’s President Victor Yushchenko, who never misses a chance to show his discontent with the currently effective Russian-Ukrainian gas agreements. What’s more, Yushchenko has, in violation of the intergovernmental agreements, posted an open letter to Russian President Dmitry Medvedev on the Web Thursday to suggest revising the gas contracts immediately, or else, Yushchenko warns, Ukraine will be unable to guarantee reliable gas supplies to Europe.

Moscow and Brussels have already pointed out in what seems an identical reaction to Yushchenko’s message that open blackmailing and attempts to intimidate partners are inadmissible for well-developed relations between political and economic partners. It is understandable, of course, that Yushchenko thus seeks to settle his problems in the run-up to Ukraine’s presidential election, but he has certainly embarked on a path that ends in an impasse.

Meanwhile Prime Minister Julia Timoshenko has reiterated that Ukraine will strictly redeem its pledges concerning Russian gas transit, so Moscow should expect no unpleasant surprise.