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DE RUEHMO #2277 2451324
ZNR UUUUU ZZH
P 021324Z SEP 09
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 4712
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS MOSCOW 002277 
 
SIPDIS 
SENSITIVE 
 
DEPT FOR EUR/RUS, EEB/ESC/IEC GALLOGLY AND WRIGHT, S/EEE 
MORNINGSTAR 
DOE FOR HEGBURG, EKIMOFF 
DOC FOR JBROUGHER 
NSC FOR MMCFAUL, JELLISON 
 
E.O. 12958: N/A 
TAGS: EPET ENRG ECON PREL RS
SUBJECT: GAZPROM SAYS PUTIN-TYMOSHENKO "AGREEMENT" JUST 
POLITICAL STATEMENT 
 
REF: A. MOSCOW 971 
     ¶B. ASHGABAT 462 
 
Sensitive but unclassified.  Please protect accordingly.  Not 
for internet distribution. 
 
-------------------------------- 
NO "AGREEMENT," JUST A STATEMENT 
-------------------------------- 
 
¶1. (SBU) According to press reports quoting unnamed sources, 
PM Putin and Ukrainian PM Tymoshenko reached an agreement in 
their meeting in Poland that Russia would allow Ukraine to 
buy less gas than it has contracted in exchange for lower 
transit fees and contracts for Russian nuclear energy 
companies.  Official statements from the GOR, however, were 
far more vague, with Putin's website only posting 
Tymoshenko's public statement that "we have resolved all the 
problems on the issue of gas supplies," along with Putin's 
even more general statements regarding the importance of the 
constructive bilateral relationship. 
 
¶2. (SBU) Gazprom's Director of Foreign Relations, Ivan 
Zolotov, told us September 2 that the reported "agreement" 
between PM Putin and Ukrainian PM Tymoshenko is "just a 
verbal political-level statement of support" for a decision 
that Gazprom had already made.  He said there was no formal 
agreement between the two leaders.  Zolotov said Gazprom had 
already decided long ago that it would not enforce the 
take-or-pay clause in the January contract with Ukraine's 
NaftoHaz.  He said that although Ukraine has taken far less 
gas than the volumes for which it had contracted, Gazprom 
would not impose multi-billion dollar fines to which it is 
legally entitled.  "Given the current economic situation in 
Ukraine," he explained, "we made this decision to help avert 
another crisis."  As for press reports of lower future 
transit fees for Gazprom, Zolotov simply said "the issues 
are, of course, interconnected; there is always give and take 
in negotiations."  He added, however, that this issue is 
still under negotiation and that the two sides have not yet 
reached a firm agreement. 
 
¶3. (SBU) Zolotov noted Gazprom's concern that allowing 
Ukraine to renege on its commitments could threaten Gazprom's 
take-or-pay contracts with its other customers, with whom, he 
added, the company is also "in negotiations."  He admitted, 
however, that renegotiating with Ukraine helps Gazprom in its 
discussions with Turkmenistan.  In response to a lack of 
demand and high prices for Turkmen gas, Gazprom stopped 
taking gas deliveries from Turkmenistan in April following 
(or some say causing) an explosion along the pipeline route 
linking the two countries (reftels). 
 
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COMMENT 
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¶4. (SBU) Although Gazprom and GOR officials have sometimes 
referred to the idea that Ukraine would have to pay fines for 
breach of its take-or-pay contracts, they have also said 
privately and publicly that they would give Ukraine a pass. 
Given the collapse of demand for gas as a result of economic 
crisis and the competition from LNG and other sources, 
Gazprom, as Zolotov admitted, will have to demonstrate 
flexibility with its contracts with many of its customers. 
In this instance, however, the political backdrop of 
Ukrainian elections is perhaps even more important than the 
gas trade itself.  Avoiding a new gas war with Ukraine and 
demonstrating goodwill should help shore up Russia's standing 
and influence among the Ukrainian population.  The 
"agreement" on gas, even if only a "political statement," 
coupled with the agreeable exchange between Putin and 
Tymoshenko (in contrast to the recent vitriol between the 
Presidents), could also appear as a signal of Moscow's tacit 
support for Tymoshenko.  End comment. 
Beyrle