Publication: Monitor Volume: 5 Issue: 8

Russia’s Gazprom chairman Rem Vyakhirev accuses official Kyiv of “theft” and of “purposely destabilizing the European gas market” by siphoning off Russian gas bound for Central and Western Europe via Ukraine. Ukraine allegedly “misappropriated” 2.5 billion cubic meters of Russian gas last December and has redirected some 55 million cubic meters per day since the first of the year. Addressing Ukrainian Prime Minister Valery Pustovoytenko, Vyakhirev estimates the Ukrainian government’s arrears for Russian gas at US$1.6 billion, a substantial increase from the $1.1 billion agreed upon by the two governments last November. It is politically significant that Gazprom published its message in the newspaper “Nezavisimaya gazeta,” which is controlled by CIS Executive Secretary Boris Berezovsky and usually reflects his views on Russia’s relations with CIS countries.

Naftogaz Ukrainy (Ukraine’s Oil and Gas State Committee) argued yesterday that the gas allegedly siphoned off was part of the Russian compensation to Ukraine for transiting the Russian gas. Moscow in fact pays for the Ukrainian transit services partly in cash and partly in gas. Refuting as well the $1.6 billion debt estimate, Naftogaz maintains that the Ukrainian government owes $735 million to Gazprom for gas deliveries up to January 1 of this year; and that Ukrainian private companies owe Gazprom a further $348 million, for which the government bears no contractual responsibility. Naftogaz management objected also to Vyakhirev’s “very rude tone.”

Aleksandr Razumkov, Kyiv’s leading official advocate of economic rapprochement with Moscow, commented that Russian-Ukrainian relations today are such that “accusations of bad faith can only be mutual” (Nezavisimaya gazeta, Itar-Tass, ORT, UNIAN, January 12; Eastern Economist Daily (Kyiv), January 13). Razumkov, a deputy chief of Ukraine’s National Defense and Security Council, is the Ukrainian co-chairman of a top-level Russian-Ukrainian “strategic group” mandated to meet periodically and patch up bilateral relations. The group hardly ever meets, however.

A strict record of the Russian compensatory gas quota for Ukraine is difficult to keep because the transit pipelines are not separated from Ukraine’s internal distribution pipelines. Further, two giant underground storage sites for the Russian gas remain under Ukrainian management, despite Gazprom’s long-standing attempts to take them over. The level of Ukrainian arrears to Gazprom and the reimbursement procedure appeared to have been settled last November by an intergovernmental agreement, which allowed for reimbursement of a large part of the $1 billion debt in Ukrainian goods, primarily agricultural (see the Monitor, November 6, 1998). The agreement, favorable to Ukraine, was made possible by the Russian government’s decision to accept a barter settlement of Gazprom’s tax arrears, instead of cash. That decision was, in turn, an aspect of the Russian government’s move away from economic reforms, as well as a reflection of Russia’s incipient food shortages and growing need for Ukrainian foodstuffs. Deliveries, however, have barely begun.