Archive for May 11th, 2010


Holidays over – back to business…..and the Gazprom offer

May 11, 2010

Well dear readers, now back from Tartarstan, which appears to have been a successful trip……so far……and refreshed from a day doing very little yesterday…….it’s now back to business for everyone and that includes contemplation on the Russian offer regarding Naftogaz Ukraine and Gazprom.

I don’t really want to go on and on about gas, Ukraine and Russia……but it will be another major issue.

Credit to the current President wanting EU involvement at some stage in any negotiations…….but really what does the EU care.  Its sole concern is undisrupted supply via…..whoever.

I of course see the attraction for Russia and Gazprom in the Ukrainian transit system and underground storage, oil lines and natural resources that remain untapped. 

Naftogaz Ukraine may be a prime example of poor management, poor politics and the scapegoat for the loss making short term poor decisions made ever since Ukrainian independence and annually bankrupt to the tune of 2% of GDP every year…….but it is not worthless due to the hard assets it has, regardless of the huge debts it also has.

Herein lays the problem.  After exceptionally poor political negotiations relating to gas by President Yushenko in 2006, Prime Minister Tymoshenko in 2009 and probably latterly the current President…….who knows, the devil in the detail has yet to reach the public domain…….there is no tangible or even public multifaceted energy policy.

It is true that the current Ukrainian Energy Minister met with the EU’s Energy Minister last week and there was significant progress between both parties.  What progress that is who knows?  The statement from both men stated good progress had been made  and even individuals had been nominated for direct person to person liaison from here on…….why there was not that before…….who knows?

Anyway, there was no further enlightenment on what progress there had been.  Was it relating to supply via Ukraine for gas, electricity etc or was it relating to the EU taking a stake in Ukrainian energy…..or was it the EU expressing interest in…….something.

As always the EU statement was about as transparent as a Greek National Auditor.

I am struggling to see what is really in this for Ukraine at the moment.  Several statements have been made in Russia stating South Stream will go ahead regardless of any Ukrainian asset swap/merger/corporate raid with/by Gazprom.

Of course the threat of South Stream regardless may well be just a threat to force an unfavourable deal……although it may be that Russia is contractually obliged already to go ahead with the South Stream partners.  If that is so, how much benefit is there in the Ukrainian GTS for Russia other than supplying Ukraine?

What will happen to the historical and future debts Ukraine will have to Russia via the naive deals done by Yushenko, Tymoshenko and Yanukovych over guarnateed volume purchases?

Will yet another gas deal between the two nations continue to build upon false promises and estimations or will this time, there be a clear and defining line drawn and all pre-exisiting unresloved issues be concluded under any agreement in this takeover?

Politicians are due to discuss with their counterparts in Russia very soon but as normal Russia is in the driving seat whether they agree or not to any deals…….due to 18 years of short termist politics of gas by Ukraine.

I will keep you posted as things develop but will not allow this to become a domaneering factor for long.

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