14 january 2009

Russian, Bulgarian, Slovak and Moldovan Prime Ministers met at Vladimir Putin's Novo-Ogaryovo residence near Moscow

Vladimir Putin

Meeting of Russian, Bulgarian, Slovak and Moldovan Prime Ministers

"We have met the European Commission's proposals halfway and signed a relevant contract on controlling transit. You know it well. We are, however, disappointed about the way it is being carried out, or rather not being carried out by our Ukrainian partners."

Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon, I'm very happy to see you in Moscow. I'm glad you so promptly responded to our proposal to come to Russia. Regrettably, the occasion of our meeting is not a happy one. It is linked with the problems involved in the transit of our natural gas to European consumers. The countries that sustained the biggest damage from them are here. We regret what is happening, and we are doing everything on our part to resume transit.

We have met the European Commission's proposals halfway and signed a relevant protocol on controlling gas transit. You know it well. We are, however, disappointed about the way it is being carried out, or rather not being carried out by our Ukrainian partners. Although politicians, including Ukrainian President Viktor Yushchenko have been continuously making statements that Ukraine is not preventing the transit of Russian natural gas to European consumers, the real situation is quite different.

I'm ready to present you with the relevant documents at this meeting. You will be shown these documents during your trip to Gazprom (I'd like you to go and see what is happening there). I hope you'll have an opportunity to meet international observers. We have every reason to say that we have done everything to resume gas supplies; moreover, we have resumed them.

Allow me to repeat that despite political statements, including those by the President, that Ukraine is not creating obstacles to transit, they are being created at the corporate level. Allow me to show you some documents. Here's a letter to Gazprom from our Ukrainian partners: "We would like to note that Russia has supplied gas through the Sudzha gas measuring unit unilaterally, without preliminary agreement."

What does this mean? This means that Ukraine admits that gas is being supplied. This means that Ukraine is preventing the transit of our gas through its territory to you. But this also means that our Ukrainian partners do not honour the document signed by Ukraine, Russia, and the European Commission on the monitoring of gas transit. It has been signed by our Ukrainian colleagues. How can one claim that we supply gas unilaterally if quite recently the Vice President of the Ukrainian government and the top managers of the Ukrainian oil and gas company signed a document on procedures of transit and control over transit?

Our Ukrainian colleagues and friends are telling us that they have problems with the transit of our natural gas to you, but these are not our problems; these are the problems of the transit side, and they should resolve these problems.

We'll talk in more detail during this meeting, and I'm ready to answer all of your questions, and to answer them meticulously. Allow me to repeat once again: I'd like you to visit Gazprom and meet the international observers working there. I'm ready to think together with you of what else the European partners and the European Commission should do to secure the transit of our gas. I believe that officials of the European Commission can exert more influence on the transit country with a view to securing the EU interests.

Zinaida Greceanii: Mr. Putin, I'd like to thank you on behalf of Moldova for inviting us to this meeting for consultations. Moldova regrets very much that we are in a situation where other gas consumers are sustaining losses because of the lack of a bilateral agreement between the Ukrainian and Russian economic agents. You know, we have a contract with Gazprom on gas supplies dating back to 2006, and a contract for gas transit for the same period, which we are successfully carrying out. In principle, we have no problems with Gazprom either concerning transit or payments. We are paying in full for the current consumption and are in constant contact with Gazprom.

At the same time, we had a predicament on January 6, when our gas consumption went down three times over. We had to switch practically all our heat and power plants to fuel oil, which is expensive for us, and is creating a host of problems. We have never made big reserves, because for gas supplies we relied on our joint venture with you, where Gazprom has practically 51%. We were always trusted as a reliable partner, although nobody thought about difficulties.

Gas consumers in the Transdnestr Region are in a worse situation. This region is receiving virtually no gas. At times even bakeries cannot function. We spoke with the President about this today. Moldova will help this region at least with food supplies. Sixteen settlements have been switched off completely. We have extended school vacations for this period. In some districts, industrial companies have had to reduce their gas consumption by half. Imagine what happens at glass factories when the furnace is switched off. They sustain big losses.

Vladimir Putin: Yes, these are uninterrupted cycle plants.

Zinaida Greceanii: Certainly. This is why we would like to see the issue between the economic agents resolved. I think they can find a technical solution to the issue, to come to terms. We understand it is important to have a contract both on transit and supply. In this case, the question will be resolved. Politicians can always offer a solution. I've come here for this purpose. We are very much hoping that this question will be resolved. Consumers do not understand why they should be freezing when Moldova has the contract. It is very hard to explain this to them. We are hoping that this question will be resolved.

Robert Fico (as translated): Mr. Prime Minister. I'm very grateful for this opportunity to talk to you. To be honest, I'd prefer bilateral talks, because each side has its own problems and difficulties. I've come here not to complain on behalf of the Slovak Republic. I'll put it plainly: the situation in Slovakia is critical. If gas is not supplied, we'll have to take measures unprecedented in Slovak history. I discussed my visit here with a Czech representative, President of the European Commission José Manuel Barroso, Mrs Merkel, and European Energy Commissioner Mr Piebalgs. Mr. Prime Minister, our arguments are very simple. We have heard what Ukraine has to say. Ukraine is also presenting the documents to prove Russia is to blame for this situation. We, however, cannot be judges, and don't have the right to interfere. We are like hostages in this dispute. I can repeat what the Moldavian colleague said - Slovakia has a signed contract. We are paying world prices for gas, and therefore have the right to demand supplies.

Vladimir Putin: And how much do you pay?

Robert Fico: $450 for a thousand cubic metres. This is a world price.

We don't care to establish now who is right and who is to blame because we are not interested in a bilateral dispute with Ukraine. We are also exerting pressure on Ukraine. I've told Mrs Tymoshenko that Ukraine is losing the trust of its European partners because of its conduct. I'm glad that the European partners have a common position on this. You have probably heard their statements to that effect.

I'm here to find a concrete solution for Slovakia. We have several proposals on how to help Slovakia, but they should be discussed at the expert level. It goes without saying that it would be ideal if Ukraine and Russia agreed to remove all of the existing obstacles.

It is wrong for European countries to freeze for lack of fuel when there is enough gas. If it is impossible to resolve the dispute, we can make separate proposals on how to talk with Gazprom, a company that has signed a relevant contract. One solution lies through Yamal, and we have already discussed this with Mr Miller. There is also a solution in relations with Ukraine, which has gas depots in its western part. There is one more proposal - you could compensate Ukraine for spending reserves in its eastern part. All these proposals are technically ready but they are only reserve proposals, because we need to find a solution that would make transit bilateral.

This is the position I wanted to voice at this meeting. Thank you.

Sergei Stanishev: Mr Putin, first of all I'd like to thank you for this meeting. The situation is getting worse not only in the countries we represent, but also in the majority of European states. Needless to say, we are all closely following the trade dispute between Russia and Ukraine on the terms of gas supplies to Ukraine and transit. The most unpleasant thing is that millions of Europeans feel as if they are being hostage to this dispute. Hundreds of thousands of people are suffering because each country had to impose different restrictions on industrial activities and in many cases household needs. Moreover, transit was stopped without any warning. There was no time to switch to alternative fuel, also causing tensions in public and everyday life.

I think that the greatest risk for Russia and Ukraine is the issue of trust, because this dispute on terms of gas supply to Ukraine has been going on for several years, and, as far as I know, continues in this or another form. Nonetheless, it should not turn third countries into hostages; by this, I mean the European countries that are honestly fulfilling the contracts signed with Gazprom.

I think these are the most serious long-term consequences if the conflict is not resolved in time. I appreciate that Russia has always said that it is fully abiding and will fully abide by its commitments. There is no doubt that a bilateral conflict is a real obstacle to this. Therefore, I am requesting that you also look for quicker solutions to the transit issues, including technical ones, because to my knowledge there are disputable issues between Russia and Ukraine on this subject. The entire European Union shares a very clear, consolidated position. Moreover, the EU has got involved in resolving the problem by sending its observers to control transit.

I'd like to ask you to look for diplomatic methods. We also have concrete proposals that could be discussed. These include short-term technical solutions, since my country is still able to provide gas for industrial and other facilities for some time from our underground depot. However, the crisis should not be allowed to last too long.

Vladimir Putin: This is clear. I'd like to make a couple of small remarks in response to what you've said.

First, it was mentioned that Ukraine is also presenting some documents. I'd like to know what they are. We have a paper from Kiev signed by international observers that transit is not going on, that it is not guaranteed. What other documents can be shown by our Ukrainian colleagues except those that have been confirmed by international observers? If you have such documents, show them to us, please. We'd like to see them.

Furthermore, I agree that our European partners are really becoming hostage to the dispute between Russia and Ukraine, but this is a dispute about supplies, terms, and prices for natural gas supplies to Ukraine itself. This is what the dispute is all about. No transit country has the right to abuse its position, and to exploit it by turning European consumers into hostages.

Transit is a separate problem. First, we have a transit contract that is valid until 2013, and additions to it that are in force until December 31, 2010. If there is a dispute on this score, it has to be taken to the Stockholm arbitration court, since this document is governed by Swedish law.

And, finally, Ukraine has signed and ratified the Energy Charter, and must provide transit for this reason. I don't care who presents papers and what they are. What is important is that we opened the tap for you and are ready to supply gas to you, but Ukraine has closed its tap and does not let gas pass through its territory.

Moreover, after talking to you, Mr Prime Minister, I instructed Gazprom to again apply for gas transit through the Uzhgorod station to Slovakia. We have repeated this request today for the Balkans as a whole, including for Bulgaria and Moldova through the Orlovka station. A total of 76.6 million cubic metres per day were on our request for all Balkan countries. For Slovakia, the relevant figure is 22.2 million cubic metres per day through the Uzhgorod station. Yet our Ukrainian partners have refused to transit this gas.

This is what the problem is all about. The problem is not that we don't supply gas, but that they don't let it pass.