Better flow: Russia and Ukraine cut out middlemen in a bid to reduce rows over supply between the two countries
Russia and Ukraine axe middlemen
Russia and Ukraine are to remove all middlemen in their gas trade Gazprom said today, ending years of opaque schemes which have caused tension and resulted in supply cuts between the two countries.
"There is no need for them now after we agreed to supply some volumes to Ukraine's industrial consumers directly and given the upcoming rise in the central Asian gas price," Gazprom spokesman Sergei Kupriyanov told Reuters.
Previously, Gazprom had been selling gas it imports from central Asia to RosUkrEnergo, an intermediary it co-owns with two Ukrainian businessmen on a 50-50 basis.
RosUkrEnergo was then selling the gas to UkrGasEnergo, a 50-50 venture between RosUkrEnergo and Ukrainian player Naftogaz, for re-sale in Ukraine.
Kupriyanov said that under the new deal, reached by Gazprom boss Alexei Miller and Naftogaz's head Oleg Dubyna today, after two days of talks, there will be no intermediaries at all, including joint ventures between state firms.
The move is likely to be hailed by Ukraine's Prime Minister Yulia Tymoshenko, who has demanded Moscow axe all intermediaries saying their role was unclear and led only to gas price increases for Ukraine.
Her tough stance and Ukraine's debt for previous supplies of gas were the main reasons behind a new round of tensions between Moscow and Kiev, which prompted Gazprom to halve supplies to Ukraine earlier this month.
Russia supplies a quarter of Europe's gas and most of that passes through Ukrainian territory.
European governments are wary of a repeat of the disruptions in Russian supply during the winter of 2006, which were also a result of a similar row between Gazprom and Kiev.
This year, the two sides argued about Ukraine's debts of between $600 million and $1.5 billion for supplies in 2007 and 2008 as well as rows over the new contract for 2008 and the role of middlemen.
Under the new deal Gazprom said it will sell Ukraine 49.8 billion cubic metres of the gas it imports from central Asia during March and December, at a price of $179.5 per 1,000 cubic metres - a level unchanged from the earlier agreement.
Of these volumes, Gazprom will receive back at least 7.5 Bcm annually for direct sales to Ukraine's industrial consumers.