It is important that gas pricing principles remained intact in the accords reached between Russia and Ukraine
Kost Bondarenko, Head, Kiev Gorshenin Institute of Management Issues
The accords reached are a compromise. They were important for Russia because of the prestige and the need to consolidate the positions of its navy in the Crimea. Ukraine pursued strategic objectives. From the tactical point of view, Ukraine has obtained a serious gas discount – from now on the gas price will be quite liberal. Owing to the discount, the Ukrainian budget will receive a considerable amount of extra funds. Moreover, Ukraine will get a chance to develop the metallurgical and chemical sectors – the major sources of the budget funds.
It should be noted that a provision of the agreement on prolongation of the Russian Black Sea Fleet presence in Ukraine is likely to become the catalyst of the opposition’s activities. This moment is a kind of a casus belli – justification for acts of war by the Ukrainian opposition. But for this decision, the opposition would find other catches.
Konstantin Simonov, National Energy Security Fund
It is important that gas pricing principles, provided for in the contract of Gazprom and NAK Naftogaz Ukrainy, remained intact in the accords reached between Russia and Ukraine. This means nothing has changed in the relations between the companies in general. The penalty charge option was dashed out from the contract, but we clearly understood that Ukraine was not capable of these charges. Similar concessions were admitted in relation to a number of European consumers. This shows Gazprom’s flexibility in a somewhat difficult period.
In this case concessions were made by Russia, not Gazprom. It’s reasonable – Russia will achieve political benefits and pay for them from the state budget instead of the Company. Politics did come back into our relations, however, it is important that politics didn’t come back into the relations between the companies.
The gas discount granted to Ukraine is rather significant. It actually allows Russia to consider Ukraine as a Russian territory in terms of gas pricing. Meanwhile, according to opinion polls, the bulk of Russian citizens have always believed we should not forget Ukraine and should help it.
At the same time, I think Ukraine still preserves a high potential in decreasing the gas price on the domestic market, since there are a lot of intermediaries in the country. Therefore, Gazprom can insist on the Ukrainian gas market liberalization, on getting a chance to participate in the underground gas storages management.
Valentin Zemlyansky, Independent expert, former press-secretary of NAK Naftogaz Ukrainy
From the economic point of view, it is obvious these accords are quite positive for the Ukrainian industry and NAK Naftogaz Ukrainy. Previously, there was a gap of nearly USD 100 between the sale price and the purchase price. Thus, we were buying gas at USD 330 per 1,000 cubic meters and selling it to industrial consumers at USD 228 per 1,000 cubic meters. It is not surprising that this gap had to be balanced on the account of the state budget.
It is also important to note that the accords reached allow for preventing the recurrence of gas crises. The accords on discounting are made for a long-term period unlike the accords reached earlier by Yulia Timoshenko. Irrespective of any price fluctuations, we’ll have a sufficient safety margin.
In addition, this is an unprecedented situation for the current Ukrainian government as Ukraine received a real chance to upgrade the industry, the housing and utilities sectors through their reformation. I believe this is one of the most important features of the accords reached.
As for adverse impacts, it is evident that the gas contracts relation to the Black Sea Fleet will be used by the current opposition as a reason for criticism of the government and as means of destabilization of the situation in the country.
From the reputational point of view, both Russia and Ukraine benefited from the accords since the parties have again started establishing ties on the level of business entities. It’s a great advantage. I suppose Gazprom and NAK Naftogaz Ukrainy will further negotiate without interference with the political level.
It may happen that the parties will cooperate in other fields. So far, we may generally speak of thawing in relations between Russia and Ukraine. In this case gas is merely the first step.
The opinions expressed in this section may not necessarily coincide with the official position of Gazprom