Russian gas giant, Gazprom, and Ukraine’s energy monopoly, Naftogaz Ukrainy, agreed last Wednesday to resume shipments to Kiev, which has been causing much concern to the European region.

This comes in spite of allegations of unfulfilled contracts and non-paid debts on the part of the Gazprom; who prior to this issue had a very good reputation for reliability within the European region.

The dispute between the enegy providers has left Kiev and parts of Europe with around half of their normal supplies of gas.

According to the terms and conditions of the agreement between Naftogaz Ukrainy and Gazprom, they have settled on a 600 million dollar debt payment for the supplies of gas that have been sent for the present year. Both the sides said that Gazprom would restore consignments in full.

This latest series of disputes between the two energy monopolies occurred just after the prime minister of Ukraine Yulia Tymoshenko rejected to sign treaties with the Russian energy giant. However, Viktor Yushchenko, president of Ukraine, had agreed upon the contract.

Last Wednesday saw the Russian president, Vladimir Putin, and the Ukrainian president, Viktor Yushchenko, facilitate the contract. This happened immediately after Gazprom said that Ukraine was beginning to diminish the consignments to the European region in order to pay off huge deficits on the domestic gas market.

According to an arrangement made through mediators, Alexei Miller, the chief of Gazprom, and Oleh Dubyna, the head of Naftogaz Ukrainy, agreed upon the debt payments. This was done immediately after both the presidents had a chat via telephone.

However, both sides are yet to agree on some of the main issues of how much Gazprom will be paid by Naftogaz. Whether upcoming sales stablize and whether a joint undertaking which is half owned by the Russian gas giant are enacted are still not agreed upon decisions, said the representative.

Ukrainian energy monopoly Naftogaz was cautioned about the cutbacks that would create chaos in the European region regarding gas supplies. This would further raise disputes which might lead to shortfalls of gas supplies in the European region. 25 % of gas requirements for Europe are currently being supplied by Russia, most of which goes to Ukraine.

On March 6th, the European Union expressed its deep concern over the cutbacks of gas supplies while the International Energy Agency said that it was an extremely harsh move opted by Gazprom. The director of gas research at OIES, professor Jonathan Stern, said that Gazprom recognized it was eventually going to be responsible for the crisis although it was mainly motivated by Yulia Tymoshenko.

She eliminated liaison Ukrgazenergo from the gas market and refused to sign an agreement for the upcoming year. Jonathan Stern said that it was entirely foolish; this is what senior administrators do not do, senior administrators do not unexpectedly eliminate the counterparties.

Yulia Tymoshenko is at present looking forward to breaking the promise made by Yushchenko in February, who had agreed that the two gas giants, Ukrgazenergo and Rosukrenergo, would be restored with a joint undertaking between Naftogaz and Gazprom.

Tags: European Economy News //