Russian Prime Minister Vladimir Putin has agreed not to fine Ukraine for buying less natural gas than stipulated in the January 2009 contracts between Naftohaz Ukrainy and Gazprom. Putin, speaking in Poland after meeting with his Ukrainian counterpart Yulia Tymoshenko on September 1, agreed that Ukraine would only pay for as much gas as it consumed.

The contracts contain a “take-or-pay” clause that obliges Ukraine to pay for at least 41 billion cubic metres of gas in 2009. Tymoshenko, however, says Ukraine would like to buy no more than 25-27 bcm this year. Ukrainian President Viktor Yushchenko reportedly suspects that Putin “forgave” Tymoshenko because Moscow secretly backs her presidential election campaign. The prime minister is set to challenge Yushchenko, who is running for re-election with little chance of victory, in the January 2010 vote.

Speaking in a TV interview on September 6, the president accused Tymoshenko of betraying national interests. He estimated that Ukraine might face fines of up to US$5 billion for buying less gas in 2009 than agreed. He also said there were no guarantees that Moscow would not eventually demand payment of the fines.

It is not clear why Putin agreed to such a concession. The Kommersant-Ukraine daily suggested on September 2 that Tymoshenko had offered Moscow a discount on gas transit fees in 2010. However, the Ukrainian premier and Naftohaz have both denied this. Naftohaz said that Russia would be charged a transit fee of US$2.67-2.72 for each 1,000 cubic metres of gas pumped through 100 km of Ukrainian territory, up from this year’s US$1.7. The Yushchenko team noted, though, that the January 2009 contracts provided for a different figure -- namely, US$2.04.

Gazprom apparently agreed with Naftohaz’s estimates. However, the matter of transit fees did come up for discussion this week ahead of a visit to Moscow by a Naftohaz Ukrainy delegation. (See “Medvedev signals opposition to changes in Ukrainian gas deal,” below.)

Ihor Didenko, Naftohaz’s deputy chairman, said last week that a group of company representatives was slated to visit Moscow within a few days. The team will discuss amendments to the January 2009 contracts with Gazprom in order to formalise the promises that Putin gave Tymoshenko, he said in an interview published by the Zerkalo Nedeli weekly on September 5. Along with Gazprom’s pledge not to punish Naftohaz for buying less gas than agreed in 2009, Naftohaz Ukraine also will also seek a reduction in gas deliveries to Ukraine to 27 bcm in 2010, said Didenko. It will also seek guarantees for the minimum volume of gas to be pumped through Ukraine to Europe, he said.

The Ukrainian government’s hope of securing Russia’s approval for changes to the natural gas supply agreements signed earlier this year has hit a roadblock this week. Just days after Ukraine’s national oil and gas company Naftohaz Ukrainy announced plans to send a delegation to Moscow for talks on amendments to the supply deal, Russian President Dmitry Medvedev signalled his opposition to any revisions. In a conversation with Alexei Miller, the CEO of Russia’s state-run gas monopoly, on September 7, Medvedev said that Gazprom should implement the agreement in its current form.

Miller noted that Kiev had proposed an increase in transit tariffs, which were set at US$1.7 per 1,000 cubic metres over a distance of 100 km, several times since the agreements were finalised in January. He also stated that his company had paid the Ukrainian transit fee in advance to the second quarter of 2010.

Medvedev replied by saying that if the Ukrainian side kept pushing for a higher rate, the Russian gas giant should stop paying transit fees. He also cautioned Gazprom against paying transit fees in advance, pointing out that the January supply deal made no provisions for such a practice.