Russia, Ukraine agree on gas and other issues


MOSCOW. (RIA Novosti economic commentator Oleg Mityayev)

The economic downturn has encouraged Ukraine and Russia to abandon confrontation and start a pragmatic dialogue.

On April 29, Russian Prime Minister Vladimir Putin and his Ukrainian colleague, Yulia Tymoshenko, agreed at their talks in Moscow that Russia would not fine Ukraine for failure to accept the contracted amounts of gas in 2009, and would pay in advance for the transit of Russian gas across Ukraine to enable Naftogaz to pay for Russian gas supplies.

In response, Ukraine invited Russia to participate in the modernization of its gas transportation system.

The Ukrainian prime minister said in Moscow that tensions in bilateral relations provoked by debates over gas supplies to Ukraine had eased off. The period of confrontation is over, she said.

Under the contracts signed on January 19, 2009, Ukraine is to buy 40 billion cubic meters of Russian natural gas this year, and is obliged to pay for the contracted amount even if it does not accept all of it.

However, the global economic crisis has undermined Ukraine's solvency, forcing it to dramatically cut gas consumption. Russia, although it has also been affected by the crisis, has made a generous gesture. On April 29, Prime Minister Putin said that Gazprom would not fine Ukraine for failure to receive contracted gas.

Moreover, Russia has pledged to make advance payments for Ukraine's transit services, which will allow Ukraine to pay for Russian gas and also to pump some of it into its underground storage facilities.

In response, Prime Minister Tymoshenko invited Russia to become a key partner in the modernization of Ukraine's gas transportation system.

"Modernization of Ukraine's gas transportation system would be impossible without Russia and Gazprom," she said in Moscow.

This should please Russia.

On March 23 the European Union and Ukraine signed a declaration to modernize the Ukrainian gas transportation system without Russia's involvement, which provoked a negative reaction in Russia. This response is not surprising; 80% of Russian gas exports to Europe go across Ukraine.

Ukraine's invitation to participate in the project so far implies only the supply of pipes and other equipment. Ms Tymoshenko said Russia produces the equipment Ukraine needs and could supply it for the project on conditions of investment recoupment.

Nevertheless, bilateral cooperation under this project could gradually be enhanced.

While the two premiers were talking in Moscow, Russian Energy Minister Sergei Shmatko said the two countries were completing preparations for an intergovernmental agreement on gas cooperation, which implies Russia's involvement in the modernization of Ukraine's gas transportation system.

Mr Shmatko said they were coordinating their drafts, adding that there were no major differences between the planned agreement and the declaration Ukraine and the EU had signed in Brussels.

Mr Putin said during a news conference after his talks with the Ukrainian prime minister that the idea of creating a Russian-European consortium to modernize Ukraine's gas transportation system, put forth several years ago, was still on the agenda.

Russia's advance payment for gas transit will apparently not suffice for Ukraine. For this reason, as Mr Putin said, Russia will consider granting three loans to Ukraine - for the acquisition and shipment of gas to its underground storage facilities, for building two power units for the Khmelnitsk Nuclear Power Plant, and for supporting Ukraine's budget.

The Ukrainian government had asked Russia for a $5 billion stabilization loan. Now that bilateral relations have started to normalize, Russia may agree to provide it.

Ms Tymoshenko also promised that Ukraine would facilitate Russia's accession to the World Trade Organization, and said that it was not supplying weapons to Georgia and would not do so in the near future.

The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.

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