Interview with Dmitry Firtash in "Vedomosti"
http://www.vedomosti.ru/newspaper/article.shtml?2009/01/11/176243
Interviewed by Irina Reznik, Vedomosti, Moscow
Dmytry Firtash, who controls a 45-per-cent stake in RosUkrEnergo [RUE], may become one of the victims of the gas war. Until 1 January 2009, RUE was supplying Ukraine with all Central Asian gas it was buying from Gazprom Export. It also supplied part of the Russian gas to Europe. If Gazprom and Naftogaz sign a direct contract, RUE will be out of the job. Nevertheless, Firtash told Vedomosti by telephone that he is not afraid of it at all.
IRINA REZNIK: Vladimir Putin said that Gazprom suggested that Naftogaz buy gas directly at the price of $250 per 1,000 bcm. Naftogaz refused but some "intermediary which agreed" appeared right away. Do you know this "intermediary"?
DMITRY FIRTASH: It is hard to say who the prime minister had in mind, but I know for sure that it was not RUE. RUE is not an intermediary because Gazprom owns a 50-per-cent stake in the company. RUE has 11 bcm of gas worth 4 bn dollars in Ukraine's underground storage facilities. What might prevent the company from receiving this money? This year, we have export contracts with Poland, Hungary and Romania for 7 bcm of gas. We will fulfil them. We were spending about 1bn dollars each year subsidising Ukraine. We should stop this ungrateful practice. RUE has never made money on Ukraine. It was subsidising it at the expense of export. Let somebody else subsidise it now!
One should also understand that RUE bought controlling stake in regional gas distribution companies in Ukraine and now it is controlling 75 per cent of the gas which is sold in Ukraine (almost 50 bcm of gas annually). Practically, it is regional gas distribution companies, not Naftogas, which sell gas. RUE efficiently reorganized itself unlike Itera and Eural Trans Gas [previous intermediaries in the Russian gas trade in Ukraine – Vedomosti]. Whatever we say, Ukraine is a vast market. I think that RUE did a good job in organizing gas supplies to Ukraine and collecting money in order to pay Gazprom.
IRINA REZNIK: Your company Emfesz sued Naftogaz. Have you calculated your losses?
DMITRY FIRTASH: Emfesz is a European company which controls 30 per cent of the Hungarian market and has obligations to its suppliers. It has to buy gas in Germany now and is making every effort to get out of a scrape, whereas Naftogaz does not fulfil its obligations. Emfesz is forced to go to court to protect itself in case Hungarian consumers decide to sue it. I would not like to talk about the exact amount of losses.
IRINA REZNIK: What happens with RUE's business, if Gazprom and Naftogaz exclude it from the scheme of gas supplies to Ukraine and Europe?
DMITRY FIRTASH: I have said already that, as a minimum, RUE will stay in the Ukrainian market as a business in the distribution market. It is not a fact that it will not stay in the export market.
IRINA REZNIK: President Dmitriy Medvedev’s estimate is that in 2008 Naftogaz was receiving gas on the Russian-Ukrainian border at $ 179.5 per 1,000 cu.m. and was reselling it on the Ukrainian market at $ 320. Who was receiving the difference?
DMITRY FIRTASH: In 2007, RUE was selling gas to UkrGasEnergo (a joint venture of RUE and Naftogaz). UkrGasEnergo was then supplying it to industrial consumers and about 12 bcm to Naftogaz. So, when Naftogaz was short of funds, we knew exactly how big this shortage was. When the scheme of the joint venture between RUE and Naftogaz worked, we did not have a single kopeck of debt to Gazprom. There was a strict control over cash flow.
But last year UkrGasEnergo was excluded from the scheme of gas supplies by the demand of the Ukrainian cabinet. RUE sold gas to Naftogaz at $ 179.5 per 1,000 cu.m in 2008 on the [Russian-Ukrainian] border. I was categorically against it, because it broke the payment scheme, and RUE with Gazprom lost the control over the gas sale revenue in Ukraine. In 2008, all Ukrainian consumers were paying for gas to Naftogaz. Naftogaz sold all gas at the price of $ 320. And now I have the same question - where has the money gone? Now, Naftogaz is completely under the control of the government headed by Yuliya Tymoshenko. This question should be addressed to her.
It is particularly interesting where the debt of $ 2.1bn came from. The most ominous is the fact that Naftogaz paid Gazprom not with the money it had received from the gas sale but with loans granted by the National Bank of Ukraine. It means that Naftogaz not only collected the money from Ukrainian consumers and put it somewhere, but it also became a debtor! The key issue for gas relations is arrangement of payments and timely payments to Gazprom with the money collected from the gas sale. The main problem in 2009 is that, irrelevant of a price which will be indicated in the contract, Naftogaz will not be able to collect the money and to pay for the received gas. And Gazprlm will end up again in the situation when Naftogaz will not be able to pay for gas, although Ukrainian consumers will pay for it.