Russia seeks over $11b in ‘debt’ from Ukraine: Gazprom.

[dipsydoodle]

Source: Gulf New / AFP

Moscow: Chairman of Russia’s Gazprom Alexei Miller on Saturday said that Ukraine must pay back the full discount it has been granted on Russian gas over the past four years, worth $11.4 billion (Dh41.8 billion).

Miller said this week’s annulment of the so-called Kharkiv accords, which gave Ukraine cut-price Russian gas until 2017 in exchange for access to the Crimea’s port facilities, means that Kiev should pay the sum total of this discount back.

“The sum of the discount granted in the time that the Kharkiv accords were valid was $11.4 billion (€8.32 billion). That is the sum that the Russian government, the Russian budget did not receive,” Miller told Russian television.

The discount was a de-facto advance payment by Moscow for the future lease on Black Sea Fleet’s facilities in the Crimean port of Sevastopol — annexed by Russia with the rest of the peninsula — and so must be paid back, he added.



Read more: http://gulfnews.com/business/economy/russia-seeks-over-11b-in-debt-from-ukraine-gazprom-1.1314737

[Cirque du So-What]

1. Between this and IMF terms

it appears Ukraine is screwed, blued & tattooed. The oligarchs and bankers will be fine, but the Ukranian people will suffer.

[okaawhatever]

2. Their discount still had Ukraine paying more for gas than the EU. Here's a chart of what Ukraine

and EU pay Gazprom for gas. It is translated form Russian to English, but it's easy enough to understand. Also, one has to keep in mind that the Ukraine gas price deducts the cost of using the Ukraine pipelines. Based on what i've read that is roughly $80-100 per 1000 cubic meters of gas.

Here are the years since the naval lease deal was signed: I used dollar signs instead of Ukraine/Currency for simplicity and the numbers are the average for the year, as price fluctuates quarter to quarter.

Year Ukraine EU

2010 $260. $301.8
2011 $309 $383
2012 $426 $385.1
2013 $413 $382.5 **
2014 First Quarter: $268
2014 Snd Quarter: $485

The recently announced price is 40% over what the EU is currently paying. Last year, even with the so-called discount Ukraine purchased 3 bcm of gas from Poland. Poland bought it on the open market and then reversed the pipelines into Ukraine to sell it back to them. That was cheaper than paying the "discounted" price from Gazprom. Add to that the Ukraine gov't subsidies which pay 75% of the cost of gas for residents and certain businesses. It's the corrupt politicians working out a deal that hurts Ukrainians and then the subsidies which go 46% to businesses that bloat the federal budget. Is it any wonder the Ukraine economy is in the trouble it's in?

Link to table: http://www.vedomosti.ru/special/gaspriceschange.shtml

[dipsydoodle]

4. Transit fee July 2012 was $3.11 per transit of 1,000 cubic meters of gas

See : http://www.bloomberg.com/news/2012-07-25/ukraine-gets-higher-transit-fee-for-russian-gas-interfax-says.html

Last figure I read elsewhere was about $2.8 / 1000 cu. meters

[okaawhatever]

6. Yes, but that is per 100 kilometers. You have to multiply the dollar amount by the travel distance

to the transit hub.

[karynnj]

17. Not to mention - if Russia can change the price of gas; why can't Ukraine change the

price of transit?

[okaawhatever]

19. Exactly.The problem is, that the Ukraine pipelines service Europe. So hurting those

countries hurts their ability to help Ukraine. Putin knows this. He's been very active in stopping alternative pipelines and allowing Ukraine to import from other countries.

[karynnj]

15. This is eye opening and shows how corrupt that contract was

- and why Ukraine is in such trouble.

Could Ukraine buy its energy needs from the EU - which paid for the Russian oil that actually flowed through Ukraine? It is after all an open market. Could Ukraine demand ridiculous amounts to allow the Russian oil to flow? It seems that if Russia can unilaterally change prices, Ukraine could opt to react too.

[okaawhatever]

20. Ukraine has done that. They've attempted a few times, but last year they bought a bunch of gas

from Poland. Poland bought it on the spot market and then reversed the pipelines to send it back to Ukraine. All of that was still cheaper than the "discounted" gas Putin sold them.

If you look at the gas pipelines in the area and how political all of that is, it explains a lot. Ukraine also has a bunch of screwed up laws that hurt the average citizen. For example, you can only charge 1/6th for domestic gas what you can charge for import gas. That is to stop them from developing their own gas fields. Also, in the city of Kiev the heat is a central gas boiler system. There are several boilers in the city. They pump hot water through extensive pipes to each residence. The individual residences don't have thermostats (when they were communist they didn't need them) so the city turns the heat on in September and off in March or April. On warm days, people simply open their windows. Not to mention the boilers and pipes are 50 yrs old and very inefficient. Ukraine uses roughly the same amount of gas as France or Germany and they both have 7 or 8 times the GDP of Ukraine. The gov't of Ukraine then subsidizes 75% of the price of gas. A couple of problems there, first is that the citizens aren't fighting for more efficient heating systems or more fair gas prices because they aren't really paying for it. It has led to huge budget deficits, but it's not the same as paying out each month. Second, the majority of the subsidies go to business and those with higher incomes. One of the good things about Ukraine is that getting the budget under control won't be hard once they get their energy under control. They will have to find a way to import gas from other areas, and they will have to update their infrastructure to make themselves energy efficient but can you imagine how little money we'd have in the US if we had to pay 7 or 8 times for energy that we pay now?

[karynnj]

21. Wow - can see comments that they need reform - are understatements

( I guess we DO pay 2 times what is needed on healthcare - but there have been at least a thousand DU threads on that!)

[Duckhunter935]

3. Russia should pay more than that

for all of the Ukrainian ships, aircraft, military equipment and spares that were invaded and taken by force from a sovereign nation. It is always nice when the invading force blockades your navy from leaving and then storms and takes them with force.

Do you think that is right?

[former9thward]

9. Those were not Ukrainian ships.

They were ships that Ukraine took over when the Soviet Union collapsed. Russia has been recognized as the successor nation to the Soviet Union by the UN. Those were Russian ships.

[Duckhunter935]

14. So using that logic

Last edited Sat Apr 5, 2014, 04:14 PM - Edit history (1)

Ukraine is still part of Russia so they should be able to take over the rest of the country.

On December 26, 1991, the dissolution of the Soviet Union was finalized by declaration no. 142-H of the Soviet of the Republics of the Supreme Soviet of the Soviet Union,[1] acknowledging the independence of the twelve republics of the Soviet Union, and creating the Commonwealth of Independent States (CIS).

The current history of the Ukrainian Naval Forces began on August 1, 1992 when it was formally established by order of the President of Ukraine Leonid Kravchuk. This was followed by a long and controversial partition of the Soviet Black Sea Fleet between newly independent Ukraine and the Russian Federation.

One of the episodes of this process was the story of the SKR-112 – effectively the first Ukrainian Navy ship.[8] On July 20, 1992, the crew of SKR-112 declared itself a Ukrainian ship and raised the Ukrainian flag. The Navy headquarters in Moscow considered this a mutiny and attempted to act accordingly. But the ship left its base on the Crimean peninsula for Odessa, causing a chase and ramming attempts by ships still loyal to Moscow. Soon several other ships, auxiliary vessels, and coastal units of the Black Sea Fleet followed SKR-112's decision but with less violent outcomes.

It was only in 1997 that the ships and equipment of the Black Sea Fleet were officially divided between the two countries.

The new Russian formation retained its historic name "Black Sea Fleet". It was also granted rights to use the majority of its bases on the Crimea Peninsula, Ukraine on a renewable ten-year lease at least until 2017. The newly established Ukrainian Naval Forces received dozens of vessels (mostly obsolete or inoperative) and some shore-based infrastructure. However, the Russian Navy lost several important facilities, most notably the NITKA (Russian acronym for "Scientific testing simulator for shipborne aviation&quot naval aviation training facility in Saky, and the special forces base in Ochakiv. The process of fleet division remains painful since many aspects of the two navies' co-existence are under-regulated, causing recurring conflicts.

http://en.wikipedia.org/wiki/Ukrainian_Navy

We all know agreements with Russia are worth less then the paper that they signed. As I see it, they were property of UKRAINE agreed to by both countries.

[okaawhatever]

18. Yes they were. The Partition Treaty of 1997 divided up the assets.

The Partition Treaty on the Status and Conditions of the Black Sea Fleet was a treaty signed between Russia and Ukraine on 28 May 1997 whereby the two countries established two independent national fleets, and divided armaments and bases between them.[2][3] Under the treaty, the Black Sea Fleet that was located in the Crimean peninsula at the time, was partitioned between Russia (81.7%) and Ukraine (18.3%), with Russia maintaining the right to use the Port of Sevastopol in Ukraine for 20 years until 2017.[4] The treaty also allowed Russia to maintain up to 25,000 troops, 24 artillery systems, 132 armored vehicles, and 22 military planes on the Crimean peninsula.

Subtelny, Orest (2000). Ukraine: A History. University of Toronto Press. p. 600. ISBN 0-8020-8390-0.

Full text of the treaty:
http://zakon4.rada.gov.ua/laws/show/643_076

[Duckhunter935]

22. Thank you nt

[Sunlei]

25. Putin broke the treaty!!

[okaawhatever]

27. Are you saying that because Putin broke the treaty he shouldn't have to pay for the Ukrainian ships

he stole?

[Sunlei]

30. Putin owes Ukraine billions in the items he looted!! instead hes trying to scam Ukraine

No one turn over any bank accounts to Russia.

[okaawhatever]

32. Oh, absolutely agreed. nt

[Sunlei]

31. perhaps Russia should get rid of Putin before he harms their crummy economy even more.

[christx30]

29. I think if Putin wants to complain

about NATO breaking a treaty, they should laugh in his face. We all know how seriously Putin takes treaties.
Putin is a thief.

[DeSwiss]

11. Only if the US goes first.

[TwilightGardener]

5. So...Russia gives Ukraine a deal on gas prices to pay for their leases

in Crimea, and then invades and annexes Crimea for themselves, also keeping the military assets there--and now that Russia has broken the terms of the lease agreement with its own aggression, wants Ukraine to pay up for LOSING Crimea to Russia? Seems legit.

[okaawhatever]

7. Oh no, better than that. They used the base for at least 3 of the 7 years the gas deal was good for.

Russia is saying that not only do they not have to pay for the lease in the future, they want their money back for the discounts they gave during the three years they were there (2010-2013). Isn't that rich?

[dipsydoodle]

8. I've not seen anything to demonstrate these were part of the lease payment payments.

The value of the lease was seen to be $30 billion / roughly $1 billion p.a. at which point Putin is alleged to have said "I could build 10 bases for that."

The discount referred to of $100 / 1000 cu.meters seems to have been in addition to the lease payments.

[GeorgeGist]

33. Going Forward Gasprom might have a case ...

but going retro seems vindictive or capitalist.

[Benton D Struckcheon]

10. Waitaminnit.

Let's say this was a bank or something. The bank just took over your house and threw you out. Now they want you to finish paying the mortgage too.
That's what's going on here. The Russians threw Ukraine out of Sevastopol. Logic dictates the debt incurred for the possession of Sevastopol is this 11 billion dollar debt. The debt is, therefore cancelled.
You don't get to repossess the house AND get the mortgage paid off fully too. Someone needs to explain that to these folks.

[DeSwiss]

12. It was gas.

Not a house.

[Benton D Struckcheon]

16. It was an analogy.

The point stands.

[okaawhatever]

26. Exactly. I was just looking up something about that deal and found a statement made by

Ukrainian officials when the deal was signed.

"We would like to assure our partners in the United States and other Western countries that the prolongation of the stay of the Black Sea Fleet on Ukrainian soil doesn't pose any threat to Ukraine's sovereignty, its independence or its European integration course," said Oleh Voloshin, director of information policy in the Foreign Ministry.

http://www.washingtonpost.com/wp-dyn/content/article/2010/04/21/AR2010042103836.html

Except that it did all of those things.

[freshwest]

36. That's how it strikes me, too. And from this thread, it appears Ukrainians were given no incentive

to conserve or seek alternate forms of energy to make them independent of foreign suppliers for what is a very much needed resource. The whole thing sounds off.

[karynnj]

13. So, they retroactively owned the Crimea?

It seems the discount was for the use of the port - wouldn't they STILL have owed that for the last 4 years? (ie wasn't there rent in each of those years -- as well as the rent for the future years? )

They already eliminated the discount for the present time period - and in fact are charging more than to any of their European customers. To say that the PAST costs should be increased is ridiculous.

[Sunlei]

23. Lets deduct that 11 billion "scam" from what russia embezzeled from Ukraine over the decades

[Sunlei]

24. the entire russian gazprom 'company' is only worth US$123.2 billion. what a cheat Putin is!

[dipsydoodle]

34. That's probably net worth :

not sales turnover.

[olddad56]

28. Shouldn't be problem, the IMF has already loaned them the money.

[SunSeeker]

35. Russia can deduct it from it owes Ukraine.

However, it will make much of a dent in what Russia owes Ukraine for Stalin killing 7.5 million Ukrainians.

http://en.wikipedia.org/wiki/Holodomor