Ukraine to pay roubles for Russian gas

2011-11-09 18:06:42

From December Ukraine is to pay for the Russian gas in rubles. According to Prime Minister Nikolai Azarov, in November Ukrainian authorities plan to finalize talks with Russia on the revision of the current gas contracts.

Experts have been called on the authorities of the CIS countries to switch to payments in rubles on the territory of CIS countries in as many branches of economy as possible. First of all it concerns energy resources. Once the parties agree on payment for oil and gas in rubles, it will gradually turn the ruble into a steady currency in many countries.  While the process of turning ruble into a reserve currency is underway Ukraine’s grivna is shaking. That is why the use of ruble in trade operations between Russia and its close neighbors Ukraine, Belarus and Kazakhstan is quite promising, the head of the Russian gas society, vice speaker of the State Duma, the lower house of parliament, Valery Yazev says:

"In general trade operations with Russian energy resources, whether it is gas, oil or uranium enrichment services should be performed in rubles, which is in line with the plans of establishing of the International Financial Centre in Moscow announced by the president. I support the idea to start making payments in rubles on certain contracts."

While the choice of the currency to pay for the Russian gas is clear, Russia and Ukraine still fail to agree on the gas price. Ukraine has made it clear many times that it finds the current gas price unfair and wants to buy gas from Russia at a lower price. In such situation there is a threat that Ukraine may start to dictate its own terms to Russia. Such fears are not groundless ahead of Russia’s entry to the World Trade Organization (WTO).

Ukraine’s Economic Development and Trade Minister Andrei Klyuyev said that Ukraine may retract its consent for Russia’s entry to the WTO. He admitted that Ukrainian authorities would have to use this measure if they failed to lower gas price in the course of talks. However the language of ultimatum is hardly acceptable in the negotiations process. Russia uses the same formula for setting gas prices for different countries including Ukraine, Valery Yazev notes:

"Russia’s gas price formula is almost equal for Ukraine, Germany, Austria and Italy. The set of coefficients is the same, the targeted basket of oil products is the same whether it is Rotterdam commodity exchange or some other market. We should not ignore the fact that in Europe gas prices are influenced by spot markets. In Ukraine spot market as such does not exist. Negotiations are under way. Gazprom is in talks with many wholesale gas purchasers and some of them are holding talks more successfully than others. Ukraine is less successful in these talks.  Let’s give an opportunity to Gazprom and Naftagaz to agree on the price."

Experts doubt that Ukraine will use Russia’s coming entry to the WTO to get concessions on gas price issue.  The EU has tools to make pressure on Kiev.  Moreover there have been no precedents yet that a country, which already agreed with its partner on all the terms of its entry to the WTO and approved them, sets new terms several years later. This would look almost like a blackmailing attempt.

Closing gas transit to Europe is unrealistic, experts say. For Ukraine, which is a member of Europe’s Energy Community (EEC), disrupting Russian gas transit to Europe would mean spoiling international reputation. The Ukrainian government won’t agree on it.  Thus the repetition of 2009 events is very unlikely.



The Voice of Russia