VZCZCXYZ2017
PP RUEHWEB

DE RUEHKV #0471 0640804
ZNR UUUUU ZZH
P 040804Z MAR 08
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 5115
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHZG/NATO EU COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY

UNCLAS KYIV 000471 
 
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 ECON ENRG PREL UP
SUBJECT: UKRAINE: GAZPROM REDUCES GAS TO UKRAINE BY ANOTHER 
10% 
 
REF: A. KYIV 469 
     ¶B. MOSCOW 605 
 
Sensitive but Unclassified.  Not for Internet. 
 
¶1. (SBU) On March 3, hours after informing NaftoHaz by 
telegram that gas supplies had been reduced by 25%, Gazprom 
sent a second telegram announcing an additional 10% reduction 
in gas supplies, which Gazprom said brought the total 
reduction to 40 million cubic meters (mcm) of gas per day. 
NaftoHaz, for its part, calculates that Ukraine's supply has 
been reduced by 46 mcm per day.  Ukraine's overall household 
gas consumption has declined due to warm weather and 
presently stands at 150 mcm of gas per day.  According to 
NaftoHaz chief spokesman Valentyn Zemlyanskiy, NaftoHaz will 
use gas reserves from underground storage facilities, 
allowing sufficient supplies for Ukrainian consumers for a 
month.  NaftoHaz assured its European customers that transit 
has not been reduced and supplies to Europe remain 
unaffected.  Meanwhile, NaftoHaz officials are reviewing 
Gazprom's latest proposal of a draft agreement in preparation 
for continued talks later this week in Moscow. 
 
¶2. (SBU) Ukraine's First Deputy Prime Minister Oleksandr 
Turchynov, characterized the current reductions as Russian 
political blackmail.  Turchynov noted that Ukraine has not 
reciprocated with blackmail of their own, despite the fact 
that Gazprom is delinquent on transit fees from December 
2007, but did not disclose the amount owed.  Gazprom 
responded that it would gladly pay the transit fees in 
question once NaftoHaz provides an official invoice. 
 
¶3. (SBU) Although President Yushchenko has also refrained 
from making comments on the recent reduction, he admonished 
PM Tymoshenko to avoid escalating current gas disagreements 
into a gas war. Yushchenko also telephoned Putin after the 
Russian presidential election to congratulate Putin's 
successor.  Russian press reports indicated that the two 
presidents discussed the gas situation, although details of 
the conversation were not revealed. 
 
¶4. (SBU) In Kyiv, NaftoHaz has turned to the Kyiv Commercial 
Court for concurrence on a February 6 Cabinet of Minister's 
cancellation of UkrHazEnerho's (UHE) operating license. 
Despite the recent gas reduction, NaftoHaz has not backed off 
on its demand that the gas intermediary UHE must be finally 
eliminated from the gas arrangement, so that NaftoHaz can 
regain control of the industrial gas distribution sector and 
profits lost to UHE.  In an event apparently not directly 
related to the current gas disagreement with Russia, 
UkrNafta, Ukraine's largest oil company (51% state-owned), 
decided to mothball 140 natural gas wells (total extraction 
volume of 950 mcm per year) throughout Ukraine.  UkrNafta 
based its decision on a recent decision by regulators to 
reduce their selling price for gas by almost 27%.  (Comment: 
Although the amount of gas involved is not decisive (about 3 
mcm/day), if UkrNafta follows through on its threat, this 
will somewhat worsen Ukraine's gas supply situation.) 
Taylor