Russian Prime Minister Mikhail Kasyanov and Ukrainian Prime Minister Viktor Yushchenko met in Moscow on November 17th to discuss plans to allow foreign firms to manage Ukraine’s natural gas pipelines without privatizing them.
Russia has been eager to put an end to the state-approved pilfering of up to 10 billion cubic meters of gas per year from the pipelines through Ukraine of Russian gas giant Gazprom.
Ukrainian and Russian Presidents Leonid Kuchma and Vladimir Putin had reached an agreement in October that Ukraine would cease siphoning and re-exporting Russian gas transported through it to Western Europe, after Gazprom had announced on October 19th that it had formed a consortium to build a new gas export pipeline that would bypass Ukraine.
The 373-mile/about 697-km, $2 billion pipeline would have a capacity of 60 billion cubic meters of gas per year and could have two lines running through Belarus, Poland and Slovakia to ship gas to Western customers.
On October 20th, Russian oil pipeline monopoly Transneft indicated that it had drafted a government resolution that, if approved, would allow it to construct an export pipeline bypassing Ukraine.
The Russian company would like to replace the 100-km section running through Ukraine of an existing 740,000 b/d pipeline that transports Russian crude oil to the Black Sea ports of Novorossiisk and Tuapse, citing high transport fees.
The company says that it has the equipment and pipes necessary to build the proposed 252-km, $100 million bypass.
Yushenko said that: “The best way to use the transit system today might be to look at some sort of a concession. We need to cooperate on issues representing our fundamental interests.” Oil analysts have suggested that the problem of Ukraine’s gas thefts would only be solved by privatizing or transferring the management of the pipelines to an outside company.