Fri Jan 13th, 2006 at 10:28:37 AM EST
In the recent spat about the Russian-Ukrainian gas war,
- Ukraine and many Western papers contended that Russia is just out to punish the Ukraine for turning to the West politically.
- Jérôme argued that the real conflict was between the oligarchs on the two sides, who wanted to re-divide the cake; a cake that consisted of gas given by Gazprom essentially barter for transit of Western exports and then distributed in the Ukraine for profit, and nominally Turkmen gas sold for profit by a private company owned by parts of Gazprom's management.
- In contrast, skitalets, blackhawk and slaboymni argued that the real issue is that the Ukraine exploited generous terms, to the extent of re-selling cheaply bought gas on its Western borders for market prices.
I won't further deal with the first version, forget it.
However, in the Hungarian magazine Élet ÉS Irodalom [= Life AND Literature] today, a researcher (of developments in the post-Soviet area at a scientific institute) gave a historical summary of the gas issue that reinforces parts of both versions presented at ET, but also gives further details that contradicts them in important points. Details below the fold.
Up first, a note: I myself am no energy expert nor post-Soviet politics expert, thus couldn't check the veracity of any claims, so don't debate me or accuse of bias (I can only give further details from the article, or admit that I lost oversight of the previous articles and missed something relevant).
The Turkmen gas scam
If the article is right, Jérôme missed one very important detail: the private company Itera, which first controlled the Ukrainian import of Turkmen gas, was controlled by the previous Gazprom management, and was set up when that management already suspected that Putin will fire them (in 2001). Consequently, the gas war had a long internal Russian prelude (more follows).
The re-export idea
The article gives only one concrete example of re-export, however, it connects re-export into the bigger picture at various points. The first is just the development of the Turkmen gas business (still back in 2000 under Kuchma): Ukraine didn't aim to re-sell Gazprom's gas, but Turkmen (=Itera) gas, which it was enabled by the specifics of Itera's transit agreement with Gazprom. Consequently, after the old management was fired, Gazprom exported gas to the West through the Ukraine with much less profit than Itera.
(This part of the story also had a Hungarian angle: in autumn 2000, there was a buy-up attempt of two Hungarian companies that were main industrial gas users, and which would have became Itera's buyers. The purchases failed.)
Pipeline is power
Ukraine pre-empted any moves of Gazprom's new management with a five-year treaty with Turkmenistan, thus limiting dependence on developments within Russia (e.g. the Gazprom-Itera battle). Fed up with these games, the new management aimed high: Gazprom attempted to take control of the whole pipeline network, in Russia and the Ukraine.
(Later, in a 2004 gas war less noticed in the West, this would work against Belarus - and today, as a Gazprom manager tells a German paper, their official reason for selling gas cheaper to Belarus involves the 100% ownership of the pipeline.)
Itera was pushed out soon (hence Gazprom became the sole party in the transit but not in the position to change terms), and by June 2002, Schröder, Putin and Kuchma agreed to establish a tripartite joint consortia for the control of the pipelines (and Ukraine also got a 10-year agreement for transit). But concrete talks got nowhere - so not even half-success for Gazprom.
The Hungarian Connection
Gazprom's next attempt to control the Turkmen-Ukrainian gas business was two-pronged: in December 2002, four proxies (including Hungarian businessmen) created Eural Trans Gas in Budapest, which was meant to be Itera 2.0; and in April 2003, Gazprom bought up the Turkmen gas. Only, the Turkmenbashi was selling the same gas twice. The result was that Kuchma was not willing to play along in Eural - it died by the summer of that year.
Itera 3.0: Rosukrenergo 1.0
Not wanting a two-front war, Gazprom left Ukraine alone while the start of 2004 gas war with Belarus was fought. Then in the summer of 2004, something more like what Jérôme described emerged: the Turkmen gas import was turned over to Rosukrenergo, a company controlled by two shady off-shore companies (which may or may not have Gazprom managers behind them, the article doesn't say) and the managers of the Ukrainian company (Naftogaz). Rosukrenergo was reexporting on Ukraine's Western borders, too. Left out were the Ukrainian opposition's oligarchs.
Prelude to the war: Tymoshenko
I am not sure I fully understood this section, but if I got it right, Tymoshenko first focused her attacks on Rosukrenergo: first stopping reexport(!) for a short time, than starting investigations. (Thus not only was reexport not connected to the new government and not selling Gazprom gas, but the reexporters were attacked in an internal Ukrainian fight.) I note at this point that the single example of reexport the article mentions is the 3 bcm Turkmen gas Hungary got from Rosukrenergo in 2005.
Prelude to the war: Gazprom
Meanwhile, for its part, Gazprom made an offer in summer 2005 that is essentially blackmail: warming up its earlier strategy, they demanded that the Ukraine either pays $160 per cubic meter or gives ownership of the pipelines. On the other hand, either of these arrangements would still have allowed the continuation of the Turkmen gas reexport business, only with lesser profit - but not December's $230 ultimatum.