Pipeline a political issue for Poland
While Poland's desire to look after Ukraine's economic interests regarding the construction of a Russian gas pipeline is politically motivated, a Gazprom spokeswoman said last week that for her company, economic interests outweigh all others.
"It's officially and widely known that Ukraine is stealing gas," said Olga Borodina, deputy head of investor relations at Gazprom.
Gazprom signed a letter of intent last week with Germany's Ruhrgas, Gas de France, Italy's Snam and Germany's Wintershall to draw up plans for the construction of a $2 billion, 600-kilometer pipeline in Poland.
But without the go-ahead from Poland, the pipeline can't be built. In an effort to play big brother to its poorer economic ally to the east, Poland has insisted that the pipeline pass through Ukraine, thus allowing it to benefit from transit fees.
And Poland remained insistent through last week, when President Aleksander Kwasniewski indicated Poland would be ready to agree to the pipeline's construction as long as the project benefits Ukraine economically. He suggested a joint venture or common company, but neither Kwasniewski nor his spokespeople were available for further comment.
Polish Prime Minister Jerzy Buzek met with his Ukrainian counterpart Viktor Yushenko Thursday to discuss the issue and Buzek said an intergovernmental commission had been set up to examine the matter.
Analysts said Poland is being careful to show its allegiance to Ukraine, a trading partner offering the potential of increased exports in the future.
"The Western world in the form of Poland wants to compensate Ukraine," said Bidzina Bejuashvili, an oil and gas analyst with Raiffeisen Capital & Investment in London, noting that Russia is equally interested in keeping Ukraine tied to Moscow politically. More money in transit fees means more independence from Russia.
But from the economic side, Bejuashvili said, Gazprom made the right decision. "It would certainly be unwise for Russia to build the second pipeline through Ukraine," he said.
Analysts and the press have generally considered the proposed pipeline to be the second phase of the Yamal-Europe pipeline project, a 1993 deal with Warsaw to build two parallel strands of a pipeline originating in the Arctic Yamal peninsula and going through Belarus and Poland to Germany.
But Borodina insisted the new line has nothing to do with the Yamal project, whose first phase also bypassed Ukraine. She said Europe's gas needs do not justify the construction of a second phase just yet. The current controversial project, while bypassing Ukraine and running from north to south through Belarus and Poland into Slovakia, will simply connect the Yamal pipeline to an older pipeline, which runs through Ukraine, she said.
Ukraine has been playing down the episode, saying it wouldn't see any profit from the pipeline for years while it is under construction anyway. Ukrainian President Leonid Kuchma has admitted that his country has siphoned off gas from Russian pipelines.
Last year, Gazprom contracted 33 billion cubic meters of gas to Ukraine for its own gas needs, Borodina said. Of that, almost two-thirds were free of charge to cover transit fees. Still, Ukraine owes Gazprom $1.5 billion in back payments, Borodina said. In addition to the 33 billion cubic meters, she said, 10 billion cubic meters of gas were stolen.
During the heating season last year, Gazprom clients in other countries experienced a gas shortage because of Ukrainian practices, she said.
Of the world's proven natural gas reserves of 146.43 trillion cubic meters, 48.14 trillion or 32.9% lie in Russia, Bejuashvili said. Russia also supplied 25.4% of the 2,329.6 billion cubic meters of natural gas produced worldwide in 1999. Russia is the dominant source of natural gas for most of Europe.
