The Ukrainian parliament Jan 10 dismissed the government of Prime
Minister Yuri Yekhanurov, plunging into uncertainty the week-old
agreement that was thought to have ended the country's bitter
dispute with Russia over natural gas import prices, Ukrainian
sources told Platts.
In an interview, Grygoriy Nemyria, foreign policy adviser to
former Ukrainian Prime Minister Yulia Timoshenko, said while the
agreement signed by the two sides Jan 4 carried with it "the
illusion of resolution," in practice its future remained doubtful
because of lack of transparency.
Nemyria said 250 members of parliament voted Jan 10 for the
resolution to dismiss the cabinet in protest against the Jan 4
agreement, under which Ukraine's Naftogaz state gas company agreed
to purchase gas from Russia and Central Asia at an average price of
$95/1,000 cu meters in 2006, although the price of gas from Russia
would more than quadruple to $230/1,000 cu m. About 50 members of
parliament were believed to have voted against the resolution.
Nemyria said the government was expected to continue in office in
a caretaker capacity until parliamentary elections due Mar 26.
However, although this was the immediate political consensus, he
noted there were legal obstacles to be overcome as caretaker
governments are supposed to stay in office no longer than 60 days,
which would mean its authority would expire Mar 12.
"The impact on the gas deal depends on what course the government
pursues," Nemyria said. Earlier in the day, before the vote, Prime
Minister Yekhanurov said he intended to follow up the commercial
deal struck between Naftogaz and Russia's Gazprom with an
intergovernmental agreement between Ukraine and Russia. If this is
still the plan, Nemyria commented, "the negotiating position of the
Ukrainian cabinet of ministers would become much weaker, because of
today's vote."
Alternatively, Nemyria argued, there is a chance Ukraine's courts
may seek to annul the Jan 4 agreement. Nemyria said several groups
were filing legal suits intended to force Naftogaz chief Oleksiy
Ivchenko to face criminal charges in connection with the Jan 4 deal.
These were based on the argument, Nemyria said, "that he abused his
power and was not in capacity to sign this agreement." If so,
Nemyria added, "the court could invalidate this agreement; that is
still a very possible thing to happen."
He added: "That would return us to the status quo, the situation
up to Jan 3, with a fixed price of gas at $50/1,000 cu m to Jan 1,
2010."
"I wouldn't exclude either option," Nemyria stated.
The first option could prove problematic since Ukraine now has
only a caretaker government. The second option risks a rerun of the
Gazprom supply reductions of Jan 1 and 2, since price negotiations
in November and December saw Gazprom persistently rejecting the
concept that Russian gas might be sold to Ukraine at $50/1,000 cu m
beyond the end of 2005.
Nonetheless, argued Nemyria, Ukrainian parliamentarians are
evidently buoyed by the way Bulgaria has so far declined to agree to
recent Gazprom price increases. "Option number two would allow
Ukraine to be in same position as Bulgaria right now. The Bulgarian
government has said they are not going to renegotiate the gas price.
They say they have a fixed gas price to 2010."
Nemyria noted Ukrainian President Viktor Yushchenko, currently
visiting the Kazakh capital of Astana, had immediately declared the
parliamentary vote unconstitutional, and promised a fuller statement
Jan 11. The president also said he would not be cutting short his
visit to Kazakhstan, which Ukraine is wooing both as a source of oil
to fill the controversial Odessa-Brody pipeline and, eventually, as
a long-term gas supplier.
Nemyria said there was no easy way to solve the constitutional
difficulties, since the country's new constitutional court only came
into existence Jan 1 and no court members had yet been appointed.
Nemyria also drew attention to the Jan 9 statement by Romanian
President Traian Basescu that special interest groups around his
country's Economy Ministry were responsible for an agreement
concluded by Economy Minister Codrut Seres under which Romania will
buy gas from Gazprom at an estimated $275-280/1,000 cu m.
"It's not just Ukraine singled out for diplomacy on the Russian
side," Nemyria said. "The 1-2 January gas cutoff," he argued, "was
seen as Russian use of energy as a foreign policy tool. The
difference is that Romania and Bulgaria seem to be still resistant,
while Ukraine all of a sudden decided to strike a deal which
basically put the future of its energy security into the hands not
just of Gazprom, which provides the gas, but of RosUkrEnergo, the
shadowy, non-transparent intermediary which, because of the
so-called compromise (agreement), becomes not only the monopolist
for Turkmen gas but for the whole Eurasian gas."
"I don't think that the gas issue was resolved on the fourth of
January, as some thought; it was the perception of resolution," he
said. "It is an ad hoc solution with unpredictable consequences
still leaving plenty of room for maneuvering on the RosUkrEnergo
side and including leverage that Russia had-and has-on Ukraine
because of the Russian gas."
"Why I think it hasn't been resolved is because, if you read
carefully the agreement, it establishes the illusion of stability,"
Nemyria said. He said stability is only built in for a six-month
period. Moreover, he added, the agreement leaves "plenty of room for
disruption." This could be caused by RosUkrEnergo "for example, if
it declared bankruptcy, then what would happen?" or by the Turkmens,
who Ukrainian sources say will provide 40-bil cu m, while Gazprom
itself will only supply 17.5-bil cu m. "What if Turkmenistan decided
to reconsider the price that has been agreed-$50 or $60-the
agreement does not regulate this risk," Nemyria charged.
"The issue is not solved, because of the attempts to address it
either as a purely political or as a purely commercial problem. They
failed to address it as an issue of corruption. As long as the
corruption chain has not been cut, it leaves insecure not just
Ukraine but also Europe as a customer," he said.
Updated on: Jan 12, 2006
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