Price of the gas issue. Final Part.

This is what the newly appointed US ambassador to Ukraine William Taylor said in late June.

"Ukraine is the biggest world country, through which the transit of gas is carried out, therefore the situation between Russia and Ukraine is very important for Europe and for the whole world. However, with reference to the prices for the Russian gas exported to Ukraine, I believe that it is an issue of relations and talks between these two countries," - Mr. Taylor said.

Nevertheless, in his view, the United States is ready to provide political aid for Ukraine in the case that the government of this country asks it about such aid.

Final Part

Americans know what they want. First of all they want to protect the fragile in their view Ukrainian democracy from the rude Russian bear. If their plans are achieved and Russia somewhat calms down its ambitions concerning the gas prices for Ukraine, there will be a precedent for the other emerging democracies, such as Georgia, for example. Like, nobody should fear any pressing from Moscow, as long as we, Americans, support them.

Secondly, any opposition to the Kremlin is nothing other than weakened positions of Russia in its traditional sphere of interests. The USA does not need a strong and competitive Russia.

Another symbolical step on the way towards weakening Russia's positions in the region was a recent solemn opening of the oil pipeline Baku-Ceyhan in Turkey, carried out with all possible pompousness.

The USA became one of the main sponsors of this pipeline showing to the Central Asian countries opportunities that could be open for them should such transportation networks appear in their region. Perhaps, this is the main objective of this 5-billion project. The Americans seem to invite the Central Asian countries to save their energy resources for potential pipes bypassing Russia.

Another strategic task of the Baku-Ceyhan pipeline is a wish to show to the growing powerful "Gazprom" its real place in the global energy business. Like, you can act in Russia and in Central Asia until we, the West, find opportunities to level advantages that the Russian gas monopolist enjoys today. The oil pipeline is the first decisive step of the West in this direction.

The most interesting detail of the solemn event is the fact that Kazakhstan undertook some commitments on filling the pipe. Astana is manoeuvring between the USA, the EU, China, and Russia. Its skill in pursuing national Kazakhstani interests in any deal can only be envied.

On one hand, there is Atasu-Alashankou pipe, extremely needed by China and its rapidly developing economy. China can express its gratitude in big investment projects, which are actually being carried out by big Chinese companies in Kazakhstan. On the other hand, it is important to create a favourable image of Kazakhstan as a democratic and attractive for investments country in the West, in particular, in the USA.

The Europeans will only be happy to acknowledge existence of democratic values and institutions if they get the quantities of energy they need - 7.5 million tonnes at the first phase and 15 million tonnes in perspective - without any mediation by Russia.

Americans will perceive Astana favourably if they know that the politics of Astana are pragmatic and seeks maximum profit. It is rather economic than political principle that is ruling in Kazakhstan. And participation of Kazakhstan in the Baku-Ceyhan project is an example of how Central Asian states can manage their energy resources.

Returning to the intention of Turkmenistan to raise the gas price, several more observations can be added. Americans do have a right to defend what they want to defend. In particular, Yushchenko and Ukraine. However, according to media and informed democratic sources, the USA is ready to enter the gas relationship. The interest of Washington is due in the first place to a wish to provide the energy survival of Ukraine under Yushchenko. For this the Americans are ready to exert pressure on the Turkmenbashi, seeking to convince him to abandon the idea of the price raise for Kiev to 100 USD already on the Turkmen border in exchange for certain preferences. Their purpose is to make Ukraine pay the same price on the border with Russia. Thus, in American plans, this price will include also the payment for transit through the Russian territory. It is not ruled out that in the nearest few months there may be talks between Moscow and Washington about the triangle Ashgabat-Moscow-Kiev. At the same time taking into consideration the new disposition in the Ukrainian Supreme Rada it is unclear so far, which side will gain from the pro-Ukrainian activities of the USA in Ashgabat.

Meanwhile, "Gazprom" prepares a sort of an "air bag" for itself.

"Gazprom" is acting as a part of the state policy aiming at establishment of control over the strategic energy sector. But the current intensification of the "Gazprom" activities in purchasing assets of Russian energy companies is connected to difficulties in the relationship with Turkmenistan, from which the concern wished to buy up to 50 bcm p.a. for the export to Europe.

On June 29 the talks between Russia and Turkmenistan were interrupted: "Gazprom" refused to buy gas for 100 USD per 1,000 cm. The MFA of Turkmenistan declared that it would stop gas supply if a new contract would not be signed in one month and a half.

Now "Gazprom" is looking for new gas sources. In late June it inked an agreement with "Rosneft" that it would sell all its gas to "Gazprom" (production in 2005 - 13 bcm.) The Russian gas monopolist has identical agreements with "Lukoil" and "Novatek." Actually it satisfies "independent" players on the energy market: they can plan a growth of gas production, remaining sure that they will be getting access to the main "Gazprom" pipelines. "Gazprom," in its turn, at the expense of "independent" players is going to cover the scarcity of gas inside the country, redirecting its own products for the export: prices at the world market are higher.

This way, while the Turkmenbashi insists on his idea, - 100 USD on the Turkmen-Uzbek border, Moscow still has time to convince Ashgabat if not to maintain the price at 65 USD, than at least to reduced the price level announced by Niyazov. However, it does not mean that Ukraine (and Belarus) will gain anything. As long as the tendency of growing prices for energy is worldwide, both Russia and Turkmenistan will be able to maintain the old prices only until the 4Q 2006.

A special position of the Central Asian states could add to the intrigue. But the gas from Uzbekistan and Kazakhstan is being purchased today by Russia and therefore it is Russia that defines opportunities for gas supplies to Ukraine, which reduces the capacity of the latter for manoeuvring. Besides, all operating pipelines allow to export gas from the region to Ukraine only through Russia. The Ukrainian side is not really happy about it: it supposes that Russia can make the procedure of the gas transit through its territory more complicated. Therefore Ukraine suggests to build a gas pipeline from Central Asia through the Caspian Sea, which could be integrated in the recently commissioned Baku-Ceyhan pipeline and would allow the gas export to Europe bypassing Russia.

However, in this case apart form the economic reasonability the Central Asian suppliers should also consider political risks in Georgia and Ukraine, as well as in Russia. But the main thing is that it is a project for perspective, while the consumers need gas today.

This is why the problem can be resolved only at the level of bilateral negotiations.