Journals on Social Sciences and Humanities in Ukraine: Scientometric Analysis

1
Ukraine-Russia gas conflict underlying political
economy
SSEES Seminar London University College,
London, UK, February 17th, 2009Dr. Igor
Yegorov, Ukraine
2
Brief history of the conflict

• Common Soviet past development of gas sector in
  Ukraine in 1950s-1970s and Western Siberian gas
  reserves
• Creation of transportation corridors 80 of gas
  export goes through Ukraine
• Development of gas business in 1990s barter
  deals (Timoshenko, Bakay and others)?
• Russia, Ukraine and other parties (Central Asia
  45bn c.m. were received to Ukraine from this
  region in 2007)
• Principles of establishing gas price for Ukraine
  no formulas

3
Conflict of January - 2006

• Impact of Orange revolution beginning of the
  conflict escalation
• Gas Debts of Ukrainian enterprises
• Changes in Ukrainian position breaking the ties
  between transit fee and the gas supplies
• New agreement new price, new specialized
  supplier RosUkrEnergo (Mr. Dmytry Firtash and
  Mr. Alexey Ivchenko)?
• Retail prices 300-320 USD per 1000cubic M, while
  Russian price was 179.5 USD

4
Capacity of the Ukrainian transit system

• Input capacity 287 bn cubic meters
• Output capacity 178.5 bn cubic meters
• Contract -2009 110 bn cubic meters (120 bn
  before the dispute)?
• Conclusion the volumes of transit will drop
  according to Januarys agreement
• Plus 20 bn c.m. of own extraction

5
Firtashs Empire

• RosUkrEnergo- key gas supplier to Ukraine till
  2009
• Oblgazs up to 70of all assets distribution of
  gas in regions
• Rivneazot, Tadjic Azot, Crimean chemical palnts
  (Chemical sector)?
• Crimean titanium plant
• Zangas (Russia, Austria), companies in Poland,
  Hungary
• 3 TV channels, including Inter
• Tavria footbal club, Kiev basketball club
• Other assets

6
Key sources of income

• Higher prices for gas to industrial companies
  (higher by 60-70, than initial Russian price)?
• Re-export of Russian gas ( usual contracts were
  for 55 bn c.m. per year plus the possibility to
  export gas to Western Europe) the volume of
  re-export 5-6 bn. per year (total price about 1
  bn USD, profit up to 0.7 bn. USD)
• Utilization of gas reservoirs almost free of
  charge
• Supplies of cheap gas to selected companies

7
Yuschenkos involvement

• Participation in 2006 deal on creation of
  RosUkrEnergo
• Ties with Firtash Baturin project and other
  initiatives
• Flying scandal RosUkrEnergo indirectly paid
  for flights of Yuschenkos relatives
• Hostility to Tymoshenko and Putin

8
Alternative routes

• Nordstream up to 55 bn c.m. per year 7.4 bn.
  USD (2011) (However no possibility to increase
  supplies without Shtokman till at least 2013,
  initial capacity 27.5 bn c.m. high price of
  construction, no large disposals on the route to
  vary volumes of supplies, resistance of Baltic
  states)
• South Stream 30 bn c.m. per year 8 bn. USD
  (2012-2014)?
• Blue Stream -16 bn c.m. per year (problems with
  tariffs and Turkish consumption)
• Yamal- Western Europe (Belarus-Poland) 35 bn
  c.m. per year
• Nabucco??

9
Gazprom problems

• Declining level of capitalization (from 366 bn
  USD in July 2008)?
• Financial plan average price of gas has to be
  290 USD per 1000 cubic meters for 2009
• Decline of revenues by more than one third from
  50 bn USD in 2008
• Decline of gas supplies to CIS countries by 1.8
  in 2008
• Miscalculations on volumes of consumption in
  foreign countries
• Miscalculations of the gas price Central Asian
  countries agreed to sell gas for 300 USD per 1000
  cubic meters for 2009 in August 2008.

10
Some contract features

• Ukraine will receive at least 40 bn cubic meters
  in 2009 and 52 bn in 2010,
• In 2011-2019 special agreements will be concluded
  
• Transit tariffs could be higher after 2011
• Only formulas could be used for pricing gas
• Long term perspectives
• Yuschenkos allies are out of gas bussiness

11
Ukraines problems

• Gas consumption decline by 25 in 2005-2008
  thanks to energy savings but it still high
• Growth of transit fee during this period from
  1.09 USD per 1000 cubic meters per 100 km to
  1.7USD (some experts think Ukraine needs at least
  5.11 USD to provide reconstruction of its
  pipelines)?
• Average price for the 2009 228 USD per 1000
  cubic m (Tymoshenko) 247USD independent
  experts

12
Gas prices, USD per 1000 cubic m
13
Results for Ukraine

• Huge problems in chemical industry, as up to 80
  of the price of fertilizers is the price of gas
• Some problems in metallurgy sector (5-8 of the
  price of metal is the price of gas) but
  profitability of this sector is already negative
• Gaspromsbyt receeived the right to sell gas
  directly to one quarter of Ukrainian enterprises
  (13. 5 billion cubic metres)- chemical
  enterprises expressed great interest in direct
  supplies from Gasprom.

14
Problems for Ukraine -II

• Growth of exchnage rate Hryvna to USD to 10Hr per
  1 USD in summer months
• Growth of external deficit ( up to 10 billion
  USD)?
• Growth of consumer tariffs by 35
• Decline of agriculture by 10
• Decline of chemical sector by 30

15
Oligarchs problems

• Firtash Rivneazot and other chemical plants will
  bring loses
• Kolomoyski Dniproazot
• Donetskie groups Stirol and other enterprises
  of basic chemistry
• Conclusion Chemical industry will be more
  attractive for business, pressure from Russian
  competitors

16
Possible solutions

• New gas consortia (an old idea to involve
  Gasprom, German companies and Ukrainian
  Naftogaz)?
• Participation of the USA (Declaration on
  co-operation between two countries)
• Privatization of the gas network
• Slow privatization by Gazprom (example of
  Gaztranzit)?

17
Thank you for attention !