News as of September 24th, 2006 + Pics

[stepanstas]

Russia, Ukraine inch towards gas price deal

MOSCOW: Russia and Ukraine are close to a deal on natural gas prices, Ukrainian Prime Minister Viktor Yanukovych said during a visit to Moscow aimed at ending a bitter months-long dispute.
"We are aiming to conclude negotiations on the price for 2007 and beyond in October," Yanukovych told reporters after meeting President Vladimir Putin and his Russian counterpart Mikhail Fradkov.
"Ukraine wants to improve its economic co-operation with Russia," Yanukovych, a pro-Moscow politician, was quoted by his press service as saying at the meeting with Putin. Since coming to power in August Yanukovych has appeared to make headway in negotiating an end to a dispute with Russia over gas prices that prompted Moscow to briefly cut supplies in January, leading to disrupted supplies across Europe.
Ukraine currently pays $95 per 1,000 cubic metres of gas imported from Russia that is a mixture of Russian gas at 230 dollars and far cheaper Central Asian gas pumped through Russian pipelines. Yanukovych has called for a "pause" in Ukraine's bid to join Nato-a major irritant for Moscow and a key foreign policy aim for Ukraine's pro-Western President Viktor Yushchenko.
In September, Russian state gas monopoly Gazprom agreed to pay a higher price for imports from the ex-Soviet republic of Turkmenistan-a hike that analysts believe will lead to increases in prices of exports to Europe.
Dutch Prime Minister Jan Peter Balkenende phoned Russian President Vladimir Putin to seek an explanation for Russia's tough line on a project run by energy major Royal Dutch Shell.
Russia withdrew ecological permits for Shell's Sakhalin-2 venture this week because the firm doubled the estimate of costs for the project to $20 billion, infuriating the Kremlin and gas monopoly Gazprom, which wants to join Sakhalin-2.
British-Dutch company Shell, which owns 55 percent of Sakhalin-2, has said the cancelled approval may mean more delays in starting liquefied natural gas (LNG) supplies to Japan and the United States and yet more costs.
British Foreign Minister Margaret Beckett has already raised the issue with her counterpart Sergei Lavrov, but Russia's Natural Resources Ministry has said it refuses to accept the cost increases proposed by Shell.
Balkende said at his regular weekly press conference that he had called Putin to express his concern about the Sakhalin oil and gas project, Dutch news agency ANP reported.
The two agreed that the companies concerned and Russian authorities would stay in direct contact and try to find a solution, Balkenende added. The Kremlin said in a statement that Putin and Balkenende had discussed practical aspects of bilateral relations in the light of agreements reached during Putin's visit to the Netherlands in November last year.
During that trip, Putin slammed Shell at a meeting with Dutch business executives and spent more than 30 minutes criticising the firm's cost overruns, according to a Russian newspaper report.
The Kremlin statement said that during their phone call the two leaders "expressed satisfaction at the steady development of cooperation" in energy and other areas, which would be discussed at upcoming intergovernmental meetings.
"Both leaders expressed their confidence that the various issues that inevitably come up during the implementation of large-scale joint projects will be resolved in constructive fashion and in the spirit of understanding that characterises the relations between the two countries," it said.
Concern about Russia's crackdown has also been voiced by Japan, which expects to be the major customer for the LNG from Sakhalin-2. Two Japanese firms, Mitsui and Mitsubishi, are also Shell's minority partners in Sakhalin-2, on the Pacific Sakhalin island north of Japan.
But Russia says it will not tolerate increases in the cost of production sharing agreements (PSAs) such as Sakhalin-2 or the neighbouring Sakhalin-1 project operated by US oil major Exxon Mobil, since the Kremlin will only see revenue from the PSAs once their costs are covered. Some analysts say the tough stance on the PSAs is just a continuation of Putin's policy of regaining control over the energy sector, which has driven a massive revival of Russia's economy since he came to power in 2000.
"PSAs are now looked upon with disfavour by the government and are seen as relics of a past age when Russia was deemed hugely risky by western oil companies and PSAs were the only way to encourage them to invest," analysts at Deutsche UFG said in written research.
Shell's soaring costs has also angered Gazprom, which agreed in principle to take a 25 per cent stake in Sakhalin-2 just days before the budget rocketed from $10 billion to $20 billion. Talks on that deal have now stalled while Russia and Shell struggle to agree on what the final budget should be.
Analysts at Deutsche UFG said Russia would not go as far as to take the Sakhalin-2 licence away from Shell, but the firm might have to swallow some of the cost overrun to keep the government happy and offer Gazprom better swap terms.
Shell has said it is confident Russia will approve the new budget, which was swelled by the rising costs of metals, the strengthening rouble and the cost of contractors. - Reuters

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My Pick

Interest in NATO is growing in Ukraine

The Director of information services of NATO in Ukraine Michel Dure announced that interest in the north Atlantic Alliance is growing in Ukraine.

In a live interview on the show "Breeze" on Sevastopol TV station VMS, Mr Dure commented that he has been working in Ukraine almost 5 years and "I have never seen anything like this before, such a volume of questions about NATO, such interest."

According to him, ⌠people are interested, write letters to our office, organize local round tables and invite us to attend. People say, please come, explain, give us the information (about NATO) or tell how we can find this information.■

Mr Dure added that he was in Mykolayv last week where he met with civic groups, students, and "I haven't seen such enthusiasm for NATO in some time"

He pointed out that office which he heads is in Ukraine is "not there to convince people. We don't want to convince anybody- we want to explain the actual situation, debunk the myths and stereotypes" announced UNIAN

Quoting Dure "To say NATO is Russia's enemy, is a lie, to say that we want to humiliate Ukraine, is a lie to say that NATO is solely an aggressive military alliance is also a lie. We are prepared to explain why these lies exist. We should speak the truth and the more we speak the truth the sooner people will realize that there is something very wrong in their preconceived notions about NATO.■

The head of NATO in Ukraine adds its imperative ⌠to understand that the Russian Federation is intensively cooperating with the Alliance and we have relations with many countries including China, Japan and Australia. We cannot be the world's policeman but we do have vast experience which I believe would be beneficial for all countries from Vladivostok to Vancouver which I consider the Euro Atlantic region. All countries which enter into partnerships or strategic partnerships with us, like Russia, Ukraine and countries of Central Asia, realize the benefits of relationships with us.■

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Images of Victor Yuschenko's Visit to Odesa