VZCZCXYZ0329
OO RUEHWEB
DE RUEHKV #0469 0631133
ZNR UUUUU ZZH
O 031133Z MAR 08
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5113
INFO RUCNCIS/CIS COLLECTIVE IMMEDIATE
RUEHZG/NATO EU COLLECTIVE IMMEDIATE
RHEBAAA/DEPT OF ENERGY WASHINGTON DC IMMEDIATE
RUCPDOC/DEPT OF COMMERCE WASHDC IMMEDIATE
UNCLAS KYIV 000469
SIPDIS
SENSITIVE
SIPDIS
DEPT FOR EUR/UMB, EB/ESC/IEC - GALLOGLY/WRIGHT
DOE PLEASE PASS TO LEKIMOFF, CCALIENDO
USDOC FOR 4231/IEP/OEENIS/NISD/CLUCYK
E.O. 12958: N/A
TAGS: EPET EFIN ECON ENRG PREL UP
SUBJECT: UKRAINE: GAZPROM MAKES GOOD ON THREAT--REDUCES GAS
TO UKRAINE BY 25%
REF: A. KYIV 461
B. KYIV 451
Sensitive but Unclassified. Not for Internet Distribution.
1. (U) At 9:34 a.m. Kyiv time, NaftoHaz press officials told
us that the state-owned gas pipeline operator Ukrtranshaz had
received an official telegram from Gazprom confirming that
gas supplies to Ukraine would be reduced by 30 million cubic
meters (mcm) per day for an unspecified time. The
announcement came two days after Prime Minister Yuliya
Tymoshenko told the press she was sure there would be no
cut-off. Gazprom spokesman Sergei Kupriyanov emphasized that
although Gazprom had ordered the 25% reduction of gas to
Ukraine, European supplies would not be affected. He noted
that Ukraine's inability to solve the outstanding gas debt
and the fact that new contracts between Gazprom and NaftoHaz
have not been signed resulted in the cut-off, adding that
Gazprom was still ready to continue talks with the Ukrainians
(ref B).
2. (SBU) As news of the gas reduction spread in Ukraine,
NaftoHaz officials pledged that the reduction in gas would
not affect European or Ukrainian consumers. NaftoHaz
official Valentyn Zemlyanskiy stated that transit volumes
were not affected and reserves from underground storage
facilities would be used to cover gas consumption in Ukraine.
Ukraine's daily consumption in the winter normally averages
about 280 mcm. With winter ending, energy experts
hypothesize that current consumption is likely closer to 180
mcm per day. It appears that the 30 mcm Gazprom reduced today
corresponds to a 25% reduction in gas, which suggests that
Ukraine had been receiving about 120 mcm per day from
Gazprom. Energy experts we spoke to explained that a 25%
reduction would trigger an automatic lifting of gas from the
underground storage facility to offset Gazprom's reduction
and ensure that neither Ukrainian nor European consumers are
short-changed. They estimated that there is enough gas in
Ukrainian underground storage facilities to cover 280 mcm
(estimated average winter consumption) for 1.5 months.
(Comment: What is not clear who owns the remaining gas in
Ukraine's storage -- most presume the lion's share is held by
Gazprom, RUE, or UkrHazEnergo. If Ukraine uses this gas, it
will need to compensate the owners sooner or later.)
3. (SBU) While there were some panicky rumors running around
of a complete shut-off of gas to consumers (which did not
even happen in January 2006), Prime Minister Tymoshenko
assured consumers they could count on gas supplies. She also
announced it would be a priority for her government to enact
energy-saving measures to prepare Ukraine for the next
winter. A few short term fixes are also conceivable.
Individual municipal heating facilities could also reduce the
amount of gas consumed as well, for example by reducing
marginally temperatures in buildings, which is unlikely to
pose severe dislocation, as Kyiv's temperatures remain in the
40s.. Pro coalition politicians have called the recent
cut-off nothing more than Russian political pressure,
designed to force the Ukrainians to make gas deals with the
Russians on their terms. NaftoHaz promised to send a
delegation to Moscow by the end of this week for another
round of talks.
Taylor