crackerjacker
December 29th, 2005, 03:53 PM
Ukraine rejects Moscow gas loan offerViktor Yushchenko, president of Ukraine, on Thursday night rejected an offer of a $3.6bn loan from Russia to pay for a big increase in gas prices by Gazprom, the Russian energy company.
President Vladimir Putin had earlier said Moscow was ready to extend a loan to Ukraine in an attempt to resolve a damaging dispute three days before a Russian deadline to turn off gas supplies to Ukraine.
“We are very grateful for the proposed large credits, but Ukraine does not need them,” Mr Yushchenko said, according to Reuters. “Ukraine will pay with its own money at a price set in a comprehensible, objective fashion.”
Russia's demand that Ukraine should pay nearly five times more for Russian gas is part of a wider move by Moscow to end subsidised supplies to former Soviet republics and has provoked the biggest rift between the two neighbours since last year's “Orange Revolution” in Kiev.
That brought to power Mr Yushchenko, who has turned Ukraine's gaze towards the European Union and Nato and wrenched it out of Russia's orbit.
The dispute will threaten gas shortages in western Europe, if Russia carries out a threat to reduce the gas it pumps into the massive export pipeline that crosses Ukraine from January 1, and Ukraine continues taking out gas for its own needs.
By doing so, however, Russia would risk damaging its claim to be a reliable energy supplier, just as it takes over the presidency of the Group of Eight industrialised nations with energy security as a main theme.
The European Commission said on Thursday the reliability of Russian supplies was “of the highest priority” and it was watching the Russian-Ukrainian dispute closely.
Mr Putin, in televised remarks, told Ivan Plachkov, Ukraine's energy minister, that Russia was prepared to lend “a huge sum” to Kiev to ease the shift to market prices.
“We are ready to provide a loan on commercial conditions directly to [Ukraine's national gas company] under the guarantee of one of the international banks, European or American,” the Russian president said.
Mr Putin added that subsidised gas supplies had been acceptable while Russia and Ukraine were part of a planned economy but no longer reflected economic realities. Russia was not prepared to subsidise Ukrainian businesses or foreign companies on Ukrainian soil.
Mr Yushchenko has said Ukraine is ready to move to market prices over a period of years. But he said yesterday Kiev would “never accept” the price of $220-$230 per 1,000 cubic metres Russia is demanding for next year, up from $50 this year. “This price is a provocation,” Itar-Tass news agency quoted him as saying.
Gazprom, Russia's natural gas monopoly, earlier said it had signed a deal to buy more gas from Turkmenistan, second-biggest producer among the former Soviet republics, by more than 50 per cent to 30bn cu m next year.
Analysts said that would leave less spare Turkmen gas available to Ukraine to cover any reduction in Russian supplies. Ukraine, which uses about 80bn cu m of gas annually, buys 25bn cu m from Russia and 36bn cu m from Turkmenistan, which all flows through Gazprom's pipelines.
But Ukraine said it already had a contract with Turkmenistan to buy 40bn cu m of gas next year.
source
http://news.ft.com/cms/s/02a28a74-7894-11da-a356-0000779e2340.html
President Vladimir Putin had earlier said Moscow was ready to extend a loan to Ukraine in an attempt to resolve a damaging dispute three days before a Russian deadline to turn off gas supplies to Ukraine.
“We are very grateful for the proposed large credits, but Ukraine does not need them,” Mr Yushchenko said, according to Reuters. “Ukraine will pay with its own money at a price set in a comprehensible, objective fashion.”
Russia's demand that Ukraine should pay nearly five times more for Russian gas is part of a wider move by Moscow to end subsidised supplies to former Soviet republics and has provoked the biggest rift between the two neighbours since last year's “Orange Revolution” in Kiev.
That brought to power Mr Yushchenko, who has turned Ukraine's gaze towards the European Union and Nato and wrenched it out of Russia's orbit.
The dispute will threaten gas shortages in western Europe, if Russia carries out a threat to reduce the gas it pumps into the massive export pipeline that crosses Ukraine from January 1, and Ukraine continues taking out gas for its own needs.
By doing so, however, Russia would risk damaging its claim to be a reliable energy supplier, just as it takes over the presidency of the Group of Eight industrialised nations with energy security as a main theme.
The European Commission said on Thursday the reliability of Russian supplies was “of the highest priority” and it was watching the Russian-Ukrainian dispute closely.
Mr Putin, in televised remarks, told Ivan Plachkov, Ukraine's energy minister, that Russia was prepared to lend “a huge sum” to Kiev to ease the shift to market prices.
“We are ready to provide a loan on commercial conditions directly to [Ukraine's national gas company] under the guarantee of one of the international banks, European or American,” the Russian president said.
Mr Putin added that subsidised gas supplies had been acceptable while Russia and Ukraine were part of a planned economy but no longer reflected economic realities. Russia was not prepared to subsidise Ukrainian businesses or foreign companies on Ukrainian soil.
Mr Yushchenko has said Ukraine is ready to move to market prices over a period of years. But he said yesterday Kiev would “never accept” the price of $220-$230 per 1,000 cubic metres Russia is demanding for next year, up from $50 this year. “This price is a provocation,” Itar-Tass news agency quoted him as saying.
Gazprom, Russia's natural gas monopoly, earlier said it had signed a deal to buy more gas from Turkmenistan, second-biggest producer among the former Soviet republics, by more than 50 per cent to 30bn cu m next year.
Analysts said that would leave less spare Turkmen gas available to Ukraine to cover any reduction in Russian supplies. Ukraine, which uses about 80bn cu m of gas annually, buys 25bn cu m from Russia and 36bn cu m from Turkmenistan, which all flows through Gazprom's pipelines.
But Ukraine said it already had a contract with Turkmenistan to buy 40bn cu m of gas next year.
source
http://news.ft.com/cms/s/02a28a74-7894-11da-a356-0000779e2340.html