Interview with Dmitry Firtash in ‘Bolshoy Dozor’, a joint programme of the radio station Ekho Moscvy and the newspaper Vedomosti.
Source: http://www.echo.msk.ru/programs/dozor/566022-echo
Bychkova: You are listening to Bolshoy Dozor programme, a jont project of the radio station Ekho Moskvy and the newspaper “Vedomosti” . It is hosted today by Olga Bychkova and Irina Reznik. Good evening.
Reznik: Good evening.
Bychkova: We are in Kiev today to speak to DmytrY Firtash, a co-owner of RosUkrEnergo. We are broadcasting from a studio kindly provided by the Ukrainian television company TVi. Good evening, Mr Firtash.
Firtash: Good evening.
Bychkova: If possible, let us start with what is going on between Russia and Ukraine now. Who, in your opinion, is to blame for the gas crisis, the gas war between the two countries?
Firtash: I think that it would be a wrong for me to say who is “to blame". I am neither a judge nor a prosecutor, and I will not blame anyone or determine who is guilty and who is innocent in this situation. My view is that the current situation has emerged simply because when big people talk, and talk much, and try to flex their muscles, things end badly. Business should be business: it should be run carefully and quietly and should be based on mutually beneficial relations. What is friendship? It is a well-balanced financial relationship. The same applies to this situation. Relations between the supplier, the transit provider, the buyer and the seller should be balanced correctly. That is my opinion.
Reznik: One of the political reasons behind the gas crisis is described as a confrontation between Yuliya Tymoshenko and Viktor Yushchenko. Tymoshenko allegedly agreed to play into the hands of Moscow in exchange for the ousting of RosUkrEnergo and yourself from the gas supply scheme. Why, in your opinion, is the Ukrainian prime minister trying so hard to get rid of RosUkrEnergo?
Firtash: It is difficult for me to say what the Ukrainian prime minister wants - she wants so many things, and you have probably heard her recent statements that everything that is going on in Ukraine is most likely my fault. Well, if this is convenient for her, then it is probably true. But frankly, I think it is absolutely not true. And as for RosUkrEnergo, I would not raise such an uproar over it because there is no point in doing anything like that. It is a simple situation: it is just a company that supplied gas and had well-structured financial relations, and, as life has proven, no-one has come up with anything better so far. In Yuliya Tymoshenko's place, I would first set up some other scheme and make sure that it works and delivers results, and only then I would destroy the already existing scheme. You know, a good head of the household always keeps his old home: he first builds a new home, does everything there, completes all necessary works, moves to the new home and only then pulls down the old one. That's right, isn't it? But Yuliya Tymoshenko has done everything the wrong way round - she is trying to destroy everything old without first creating something new. As we can see, so far she has not created a single new thing.
Reznik: Briefly, what is the purpose for which Rosukrenergo was created?
Firtash: You are probably aware that I have been in the gas business for a long time and you have written about me several times, so you know the story and won’t dwell on that. But I want to say that Rosukrenergo is a relatively balanced and properly designed company that was created for a good reason. Let’s go back to the beginning and remind ourselves what happened and why. Let’s go back to the 90s and understand that, when the Soviet Union collapsed, nobody really knew who should do what and how things should work. In reality, Gazprom had not been involved in Central Asian gas at all until 2004. Before then, anyone who wanted to supply gas could do so and there were dozens of companies doing that. The first company to do this was probably Respublika, Mr Bakai’s company. They were the first to start supplying gas to Ukraine. Then came Itera, Eurotransgas and, eventually, Rosukrenergo. What’s the difference between ETG – I won’t talk about previous company because it would be wrong. Nobody authorized me to discuss the work of others. With that in mind, I can say that there was a huge difference between how ETG, which I was directly involved in< and Rosukrenergo work. Why did we need Rosukrenergo? Let’s ask ourselves the question ‘What’s happening in the gas market and why do we face difficulties today?’ It is pretty simple. Rosukrenergo has nothing to do with it. Call it what you want, we just need a balance. Let’s look at Ukraine. In my view, Ukraine suffers from a number of problems. On the one hand, it is one of the largest gas consumers, Ukraine consumes 74 billion cubic metres of gas, of which only 20-22 are extracted domestically, leaving a deficit of 52-54 billion. Ukraine has to import gas and it doesn’t really matter whether it’s Russian gas or Central Asian gas. Either way, the country has to buy gas because it consumes a lot of it. Ukrainian industry is responsible for about 32 bcm, so if we talk about importing over 50 bcm of gas, 32 of that 50 go to industry.
Bychkova: And what is Ukraine’s total consumption?
Firtash: 74 billion
Bychkova: And how is it measured?
Firtash: Very easily.
Reanik: Its own extraction makes up 22, and the rest is Central Asian gas.
Bychkova: I am sorry, I mean how consumption is measured. Are there metres everywhere? How is it recorded? Does every individual in Ukraine have a consumption metre?
Firtash: Not everyone. Gas coverage in Ukraine is very high, around 75 %. That’s a lot. Russia is at half of Ukraine’s coverage at the moment. Ukraine has very good gas coverage for the population, plants, businesses. You must understand that in Soviet times, when they were building up the country’s industry, Ukraine was assigned a very large processing segment, which involved high levels of fuel (oil and gas) consumption. That was because it was a good junction point with convenient transportation links including the sea. Ukraine is essentially more of an exporter.
Bychkova: That was the case in Soviet Ukraine. What about Ukraine’s current gas consumption? Do we know how much gas needs to be purchased?
Firtash: Again, Ukraine consumes 74 bcm of gas. Take 74, subtract 20-22 of its own extraction and youi get 50-52 bcm of imported gas, which is what we have today.
Bychkova: So, 74, less 52 or 50, where does the difference go? For export?
Firtash: Let’s take it step by step. I’ll start from the beginning. I will give you a gas lecture.
Bychkova: Please, not a very long one. I understand that I asked this question, but, if possible, please make it brief.
Firtash: I will try to answer. Imagine a container. A three litre can. You can put three litres of water in and that’ the limit. But if you put fewer that three litres in, it won’t be full. That’s how Ukraine’s gas system works. That means that the can has a capacity of 74 bcm of gas. We put it in through one end and it comes out the other end. So, this can which allows gas to come out of the other end allows the figure to be 74 billion. Ukraine’s consumption is therefore 74. Of this 22 billion is produced in the country, and 52-5, depending on how cold the winter is, it could go up by 2 billion or so, is imported.
Reanik: Last year Ukraine consumed 62 billion.
Firtash: Yes, that’d because, if there is demand, if we get temperatures of -15 in the winter months, more gas will be used by the population for heating. However, if we take the average, we get around 74 bcm. 22 is own extraction and 52 billion is imported. So Ukraine imports 52 bcm. So far, we have always bought Central Asian gas. How do we use it? If I understood your questions correctly, you want to know what this gas is used for. 32 billion is used by industry and the rest is used for utilities and by the population. That’s it.
Bychkova: So there is no export?
Firtash: Ukraine is not involved in gas exports. Moreover, I can tell you that Ukraine and Russia signed an agreement back in 1995, which stipulates, that if Ukraine exports gas, let’s say Ukraine can’t afford to buy gas in Russia or Central Asia and export it, that does not work. And the reason it will not work is that Russian and Ukraine have an agreement which says that if Ukraine does that, it has to pay a duty of $150 for the gas it exports, which means it is not profitable and it just does not make any financial sense.
Bychkova: That’s why it is not done at all?
Firtash: Correct.
Reznik: I would like to return to the second "gas war" that broke out over the past few days. Our Prime Minister Vladimir Putin tried to explain how this gas war began: according to him, on 31 December Gazprom offered to sell gas to Ukraine at $250, but Ukraine refused, and then immediately an intermediary came along and agreed, so our leaders conclude that the situation is highly corrupt. Could you explain what really happened and what lies behind the reports that it was Viktor Yushchenko who decided to break off the talks on the New Year's Eve?
Firtash: I will give a simple answer to this question - I don't know. It is difficult for me to comment on reports that could have been made, I am not responsible for these things. But I will put it simpler: when Vladimir Putin was speaking about an intermediary, which had suddenly come along, he was clearly not speaking about us. RosUkrEnergo is 50 per cent owned by Gazprom, and he confirmed this at a news conference with foreign journalists. When asked about who was Firtash's employer, he gave the correct answer, he said: "Firtash is not working for us, Firtash is not working for Gazprom, and we have no relation to him. As for the question for whom he works, ask his employer."
Reznik: Can we ask you for whom Firtash works?
Firtash: And I will answer you - I work for myself, I earn my own money and I see nothing wrong with this.
Reznik: But our President Dmitriy Medvedev has also expressed his outrage at the fact that in 2008 gas was sold at the Russian-Ukrainian border for $179.5, while it was further sold to Ukrainian consumers at over 300 dollars, and then he said - we are quoting him here: "all this margin landed in the pockets of some entities and was used to pursue some political goals". Who is really profiteering from gas supplies in Ukraine, and what is this "margin"?
Firtash: I should probably answer this question in greater detail so that you understand what we are talking about. You must understand that we did sell gas to Ukraine at $ 179.5 in 2008 - RosUkrEnergo sold gas at this price. But we sell this gas at the Ukrainian border. This gas was then received by the company Naftohaz Ukrayiny, which cleared it through customs and further sold it to the Ukrainian consumer market. Naftohaz Ukrayiny is a state-run company fully accountable to the government and to the prime minister herself. This question has already been asked many times before, and that is why I believe that it is indeed the fact that Ukraine received cheap gas from us at $ 179, and nevertheless it later raised the price and earned money for the state treasury. It is hard for me to say how this money was used - this question should be addressed to Yuliya Tymoshenko, the prime minister, or to the chairman of Naftohaz Ukrayiny, and they should say how they used this money. It probably went to the budget.
Reznik: And there is also the matter of Naftohaz’s debts.
Firtash: Let me put it this way - if you are talking about Naftohaz, I will answer the following. Let me explain why I think that the scheme that existed in 2008 does not work well. Let us look at things in retrospect. Otherwise, if I don't explain this to you, you will not understand what we are talking about. Let us look at how the scheme worked back in 2007. RosUkrEnergo sold gas at the border to its 50 per cent-owned subsidiary. This subsidiary was UkrGazEnergo. There were two shareholders in this company. One shareholder was the national joint-stock company Naftohaz Ukrayiny, which owned 50 per cent. And RosUkrEnergo, which owned the other 50 per cent. It was not a very profitable company, it was not set up to make big profits. It was a structural element necessary to control the Ukrainian market. What do we mean when we say "to control the Ukrainian market"? We refer to a situation, when we had to reach end consumers in Ukraine so that we could effectively control the process of collecting money. How does this work? Ukraine has its market, plants, hair salons, enterprises, some other entities, and they all pay for gas. All this money would go to UkrGazEnergo. UkrGazEnergo would make three payments: first to customs authorities, second to tax authorities, and third to RosUkrEnergo. This money could not have been used for any other purposes - there were only these three payments, and that was all. When Yuliya Tymoshenko became prime minister, she knew perfectly well that it would be impossible to use this scheme to get her hands into the budget, to somehow transfer this money to the budget, because it would not work this way at the time, she had no influence over this company, she could influence this company on behalf of the state, or she could claim dividends or something as a shareholder, but she could not really manage this company.
Reznik: Wait a second, Naftohaz was a shareholder there and Naftohaz is controlled by the Ukrainian government.
Firtash: Yes, it is 100 per cent controlled by the government. Naftohaz had people on the Board of Directors and on the Supervisory Board. However, given that we also had RosUkrEnergo representatives on the Boards, essentially we set up the same sysmte as with RosUkrEnergo. If you know how RosUkrEnergo operates, - and you probably do know as I already told you about this, - RosUkrEnergo operates fifty-fifty, where 50 per cent go to Gazprom's board members - four members of the coordinating committee, and four representatives from me as a shareholder are also in this company, and all decisions are made unanimously. "Unanimously" means that a majority of all RosUkrEnergo's members must vote to pass this or that decision. The same model was set up at UkrGazEnergo. When we set up this model, we immediately agreed and formally outlined the rules of the game, because we needed UkrGazEnergo not merely as a company for making money. We needed an effective control mechanism that would allow us to collect money and make sure that this money is used to make proper payments, it was necessary to control money flows from end consumers. Roughly speaking, consumers pay for gas, - I am explaining this in so much detail so that, when we speak about what happened in 2008, you understand better why she broke this scheme. So, as I was saying, consumers pay for gas to UkrGazEnergo. UkrGazEnergo knows that it can use this money only to pay customs duties, taxes and make necessary payments to RosUkrEnergo so that RosUkrEnergo can make settlements with Gazprom or Central Asia or pay for transit. No other payments could be made. Naturally, such a scheme could not suit anyone else, it could not suit someone who would want to borrow money for the budget or for some other purposes. That does not seem like anything much, but there is a quite big money flow - the gas business brings small earnings, but there is a big turnover, and, therefore, one can secretly pull this money out of circulation, which is exactly what happened in 2008. What did the government do in 2008? They put the question point-blank and tried to persuade RosUkrEnergo and Gazprom to confine gas sales to the Ukrainian-Russian border and remove our subsidiary company from the arrangement. They said it was wrong and unreasonable. I was totally against the idea, but nevertheless Gazprom persuaded us and we agreed, we signed this protocol and entered this agreement. And we saw the result immediately. If we look at the year 2007, we can see that as of 1 January 2008, there were no debts to Gazprom, no debts to RosUkrEnergo, no debts whatsoever. If we look at 1 January 2009, everything is clear, you know - I don't need to comment on what happened during that period of time, because there have already been too many comments - how much they owed, how they owed, and how much they still owe. Why did it happen? It happened for two reasons. The first reason is that we have a situation where there was no control of the market and gas was sold on the border. And another thing: when we were selling gas in 2007 to our subsidiary company, there was a very small margin, no more than two or three dollars.
Reznik: Per 1,000 cubic metres.
Firtash: Yes, per 1,000 cubic metres. This money allowed it to pay wages, to maintain the company, to pay taxes - that is, it was a clearly fixed margin diluted between Naftohaz Ukrayiny and RosUkrEnergo. And what happened next? We were really selling cheap gas, we were selling it at $ 179.5 to Naftohaz at the border, but Naftohaz would then raise the price and thus replenish its own budget or the state budget of Ukraine. We received much less than was due, because we were not receiving the money, I mean, default payments continued. No sooner had we broken up this scheme in March, than we started suffering payment defaults, which continued through the end of the year. If we look at October, at the end of October we were owed almost $ 2.6 billion it was a huge, fantastic amount that was outstanding then, and now we believe that Naftohaz still owes us some $ 650 million.
Reznik: In fact, UkrGazEnergo did one more important thing - at least, for Gazprom - I understand that, with the help of UkrGazEnergo, Gazprom entered the Ukrainian gas distribution market, as it has a 25 per cent share there, and in your recent interview with Vedomosti you said that RosUkrEnergo already controls 75 per cent of this distribution market. How can it be then that you cannot control where the margin goes, if you control the Ukrainian regional gas distribution companies which transfer money for gas, which deliver gas? How can it be that you cannot control Naftohaz in this situation?
Firtash: It is a somewhat ill-posed question, because you have squeezed two questions into one, it is confusing. Look what we have: when there was UkrGazEnergo, UkrGazEnergo allowed us [to control the market], in a sense we controlled the market. It cleared gas through customs at the border between Russia and Ukraine, and it paid for it. Regional gas distribution companies are at the end of this chain. I mean, yes, I totally agree with you that we have regional gas distribution companies, or it does not matter who has the regional companies, it is irrelevant who clears gas through customs, whether it is Naftohaz or UkrGazEnergo, it makes no difference because in the end it is regional gas distribution companies that actually sell gas - this is a fact. And it is regional gas distribution companies that pay for this gas, either to UkrGazEnergo or to Naftohaz. Where is the problem here? UkrGazEnergo is not a state-run company, it cannot be influenced by the government and it cannot transfer money to any other recipients by someone's decision or use this money to replenish the budget. To do that, one had at least to call a meeting of the management board or the supervisory board, to have them vote for this. That was impossible. And that directly allowed Gazprom to fully control the process of collecting money in Ukraine. What happened when the situation changed? It is now Naftohaz that clears gas through customs, and, when doing so, Naftohaz collects gas payments from regional gas distribution companies. I want to say that there is no company, no enterprise that did not pay for gas consumed in 2008. That is, all Ukrainian enterprises made 100 per cent of payments, and by 1 January they had fully paid for the gas they had received. What happened next? Regional gas distribution companies paid for this gas to Naftohaz, they also paid everything to the last penny. But then comes the question, the question also posed by the Russian president: How is it that we are giving you subsidised gas at 179 and you say and you tell us that your industrial enterprises do not operate properly and cannot even afford to pay for expensive gas supplies because you are not ready, but in the meantime there is corruption in Ukraine: the price is being inflated hugely and yet the gas gets sold? I will give a very simple answer to this question: we have nothing to do with this because we do not sell gas in Ukraine, we sell it at the Russian-Ukrainian border, and we have nothing to do with this. And then a very simple thing happens: Naftohaz collects this money, sets a margin big enough to replenish the budget. The thing is that our Ukrainian government is a populist one and it needs money - for savings accounts, or for some other purposes, - I just think so, I have no right to talk about this as I did not see how they actually used this money. You probably remember that yesterday the parliament had its meeting, at which the opposition and all the MPs asked the same question about how this money was used. I think that we will soon get an answer to this question.
Reznik: I would like to conclude the discussion about RosUkrEnergo by goiong back to an interview you gave to Vedomosti in which you stated that you believed that RosUkrEnergo had always provided Ukraine with subsidies amounting to approximately 1 billion dollars through exports. Why, in your opinion, did Gazprom agree to such a unprofitable deal? As we all know you only get free cheese in a mousetrap.
Firtash: Let us then look again at the background of the current situation - it will be right to do so because if we look back into the past, we can see that Gazprom did not always control Central Asian gas. Moreover, in order to supply gas to Europe, it had to go through Ukraine, and in order to go through Ukraine, it had to provide gas to Ukraine too. And Gazprom knew very well that everything had to be well-balanced. Gazprom knew that Ukraine could not pay the same gas price that European countries paid, that was impossible. There had to be a gradual transition over five or six years, during which they could smoothly switch to such prices. That is why a scheme was set up when all Central Asian gas, 62 bcm. in total, originating from Kazakhstan, Uzbekistan and Turkmenistan - a total of 62 bcm. of gas - all arrived at the Ukrainian border, where Ukraine would take about 50-52 bcm. of gas, and the remaining gas would be exported further. What was actually happening? Gazprom did not and could not lose anything because it was making additional money from this scheme - that was not its [Gazprom's] gas, those were not its volumes, it was feeding Ukraine supplying gas at a normal price, at the same time fully compensating for the losses at the expense of exports. So what was actually happening? You know, it is easy to look at RosUkrEnergo's financial statements - although it is not a public company, it has nonetheless turned into an overly public company over recent years so that probably every year you can read the annual report - it is also published by Gazprom, as it is included in Gazprom's balance sheet, and Gazprom also makes these financial statements public, and RosUkrEnergo also posts its financial statements on its website, - so you know, that we annually earn on average - we can go year by year, starting with 2005, 2006, 2007, 2008 - on average, we annually have a net profit of about 750-850 million dollars. You can ask how we compensate for Ukraine. No. We do not compensate for Ukraine, we simply earn more money, that is, we actually earn over 2 billion dollars, but we need to pay this money and make settlements for Ukraine, because if Ukraine gets its gas at $179, while we pay more, then we need to find this money - over 1bn dollars - somewhere. And we are using this scheme to find this money - we have always subsidized Ukraine at the expense of Europe.
Reznik: But Gazprom does not profit from this, it is losing in exports.
Firtash: Wrong.
Bychkova: Does RosUkrEnergo profit from this?
Reznik: It makes money.
Firtash: I will answer like this: it depends on what you mean by saying "profit" or "not profit". Look what we have now about "profit" and "not profit": we stepped aside and look what happened in January 2009, you can see the result. Why? Because Gazprom does not profit, Ukraine does not profit, and there is no company or entity that would stand up and eliminate these risks, that could come to an agreement both with Ukraine and Russia and set a price that would suit both sides. I think that the current gas crisis has been moved from the realm of business into the realm of politics. And I do not understand what was the point in doing this. It is an ordinary business, just like any other business, and I see nothing novel about it. That is why the present situation should be dealt with from a business point of view. And if we deal with it from a business point of view, we must find a way to make both parties happy. And RosUkrEnergo is exactly the company that can do this and can do this well, because it has created a well-balanced basket of gas volumes, it has a well-structured gas sales contract base, which allows it to make a certain amount of money every year. And then it is our task to estimate how much we must pay out of this money to make the scheme work. Roughly speaking, it is the price we have to pay for ensuring that everything works properly. Gazprom does not lose anything because Gazprom does not sell a single cubic metre of its exported gas to us at a price other than the commercial price. In 2006, we bought 17 bcm of gas from Gazprom, - let me remind you that it was a cold winter and there was not enough gas, - and we paid the price of $232 at the time - it was an average European price, and we did not even object, because we really purchased Russian gas then.
Reznik: But at what price did you sell it to Hungarian consumers?
Firtash: Your question is somewhat misworded, because we did not supply that gas to Hungary. We sold it to Ukraine and incurred rather great losses at the time. We do not have more than 10 billion – 11 billion per year - that is our limit, the pipes cannot carry more gas. So it does not work like this.
Bychkova: Speaking about politics, there is a widely spread opinion that RosUkrEnergo operates in the interests of Ukrainian President Viktor Yushchenko. Is there any truth in these allegations?
Firtash: I will give you a very simple answer to this question. You know, I think that any president in Yushchenko's place or in somebody else's place, if offered subsidies for his country amounting to a billion of dollars, will be satisfied with any company. The Americans once asked me the same question about why Yushchenko did not object to the operations of this company. I answered by asking them: "How many subsidies have you granted to Ukraine? How many loans? How much money did you lend to Ukraine?" Their answer was 100 – 150 million. I said, "And I provide over a billion [dollars] of subsidies annually". Is it bad or good?
Political implications of current crisis
Bychkova: Then why does Yuliya Tymoshenko object?
Firtash: That is quite a different story. I cannot explain why. Ask her "why?" and let her answer you. How can I answer such questions for her? It is about her own opinions. My opinion is that we are doing everything right. Although, you know, I will put it a little differently, I will tell you the difference between me and Tymoshenko. Tymoshenko was making money on Ukraine, in Ukraine and at Ukraine's cost. She was also writing off debts at Ukraine's cost - even her own debts - Gazprom wrote off $ 600 million of UES (United Energy Systems of Ukraine) debt - I do not know at what cost, but it did write off this debt, - this does not work for me. I was working outside Ukraine and not at its expense. My work was exports and I earned my money in Central Asia and used it to subsidise Ukraine - that is the difference between me and her.
Bychkova: If everyone was happy with everything, why does the Russian leadership say that it is not happy with the intermediary?
Firtash: I think that you are misusing the word "intermediary". RosUkrEnergo is not an intermediary. I think that, when speaking about an intermediary, the Russian prime minister meant something different. I think that some intermediary company was suggested to be set up to achieve some political or other goals. You understand everything perfectly well, you heard what the Russian prime minister was talking about - that Ukraine is now a battlefield for various political forces and clans, and then, of course, another presidential election is looming, and someone is probably interested in making this money and having some subsidies at the time of the presidential election. I think that is what he meant. But I cannot comment on this, because I have nothing to do with this and I do not know what this is all about.
Bychkova: Do you mean that the Russian side supports you?
Firtash: I cannot say that the Russian side supports me - I do not need to be supported, I am not falling, I am standing firmly on my legs.
Reznik: But it seems to me that it is RosUkrEnergo that will become the major victim of this gas war. Why do you say that you are not falling? If we assume that Gazprom and Naftohaz sign a direct contract, as all politicians and officials insist, what will happen with RosUkrEnergo's business, what will happen with your business, with Emfesz's business?
Firtash: Again, I will give quite an objective answer to this question. You know, Ukraine has never really been a business for us. For RosUkrEnergo, Ukraine was a subsidised project, it was the price to be paid for ensuring that everything operates properly. What does it mean - "operate properly"? It means that all Gazprom's gas must be exported normally, our export scheme must operate normally, the entire system must function properly, without failures, such as we are seeing now, when someone turns off gas taps to someone, when someone does not have gas, when someone cannot reach an agreement, - all this work was done by RosUkrEnergo, and that is why we granted subsidies, we understood that, without well-balanced buying, selling and transporting relations, this business will not work. This business cannot work in a well-balanced manner, unless all factors - sale, transit and purchase - are considered. And that is why we were doing this. That is why Ukraine is not a major factor for us. Well, yes, there is Ukraine, but for us Ukraine is only a project which we subsidize. In 2005-2006, 2007, - I am speaking about RosUkrEnergo only - we provided the Ukrainian budget and Ukrainian consumers with subsidies of nearly 5 billion dollars, - it is no secret, this information can be easily verified: check the gas volumes, how we bought gas in Central Asia, check the transportation, check at what price we sold gas at the Ukrainian border, and you will see at what price we sold gas in Ukraine. The Russian president actually confirmed the same, he said that over recent years, - only he spoke of a larger number of years, while we are speaking only about three years, - RosUkrEnergo has granted some 4.5-5 billion dollars in subsidies. Therefore, RosUkrEnergo will not lose anything from being forced out of the Ukrainian market, it is not a profitable business. If we have to leave, so be it but we are not losing anything.
Reznik: And what about you company Emfesz? It buys exported gas from RosUkrEnergo.
Firtash: Emfesz is a little different story. It is a Hungarian company, it has its own market, it virtually controls some 30 per cent of the Hungarian market, it sells about 3 bcm of gas - to residential consumers, to industrial enterprises, - this is to whom it sells gas. They will have this gas until 2016 - this is [the term of] their contract with RosUkrEnergo, and at the same time they also buy gas for other buyers and sellers, they have a diversified scheme - they are bound by Hungarian laws to buy gas from two or three different suppliers. Yes, they buy the largest gas volumes from RosUkrEnergo. But even if RosUkrEnergo had ceased its operations, they would have bought gas from some other supplier, because these things are not interrelated: they will have their margin, they operate on the Hungarian market and they buy at the market price.
Reznik: To conclude the subdity discussion, let’s assume that RosUkrEnergo has subsidized Ukraine with several billions dollars, but Gazprom has also entered the Ukrainian gas distribution market through RosUkrEnergo. Is this the price that was worth paying, or not?
Firtash: I will say, and it is my opinion, that sooner or later everything has its beginning and its end. Both RosUkrEnergo and the gas business, they also have their beginning and their end. Gone are the "chaotic" 1990s, and 2008, today is 2009, and time goes on. Everything will end sooner or later. At the beginning of this programme I told you that Ukraine consumes 74 bcm of gas. Ukraine buys over 50 bcm. It is the third or the fourth largest market in Europe measured by its gas consumption rates. It is a huge market and a huge business. That is why, at RosUkrEnergo, we realized very well what it was all about, we knew that sooner or later they would switch to market prices and then there would be no point in exports or anything, and we virtually built up a situation when we acquired Ukrainian regional gas distribution companies and thus gained access to the gas distribution networks and the gas market. At the beginning of our conversation I told you that no matter who clears gas through customs, it is regional gas distribution companies that sell gas to end consumers - this is how the scheme works. We currently own the regional gas distribution companies, so to talk about us leaving the gas business is absolute misrepresentation of the truth. We are firmly in it and we are feeling pretty comfortable in this market.
Bychkova: How, in your opinion, will the current crisis end?
Firtash: You know, forecasting is a thankless task when politicians are playing games and flexing their muscles. I don’t gamble and I do not know how to make predictions. I think we need to wait and see. I would like to see the conflicting parties come to an agreement - regardless of whether it will be RosUkrEnergo or not - I would like to see them gain understanding and start working. Everybody is a loser here: Europe is losing, Ukraine is losing, Gazprom is losing. I am losing two times because, on the one hand, I am a gas supplier, but on the other hand, I am one of the largest gas consumers of this gas in Ukraine, I need it for my enterprises. Today none of my businesses are doing much, because there is no gas, so the enterprises cannot work and we are talking about 20,000 people who cannot work. We don’t have work for them because we have no raw materials we need to get going.
Bychkova: Personally, where do you find it easier to solve your problems, in Moscow or in Kiev?
Firtash: I would not like to answer this question, because it is a difficult one. I cannot solve anything in Russia or in Ukraine, this is a different weight category now, with which I have nothing to do, now the dialogue is going on between two countries. If they need us, and if they feel that they need us, we are ready to give them a hand.
Bychkova: When did you last visit Moscow?
Firtash: It was probably two weeks ago.
Bychkova: Are you going to go there again?
Firtash: We’ll go if we need to.
Bychkova: Thank you very much. You were listening to the Bolshoy Dozor programme. Our guest today was Dmytry Firtash, a co-owner of RosUkrEnergo, or rather, we - Olga Bychkova and Irina Reznik - were guests in Kiev thanks to TVi. Thank you very much.
Firtash: Thank you.