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Ukraine PM heads for Moscow after gas deal agreed

Ukrainian Prime Minister Yulia Tymoshenko heads for Moscow on Wednesday after the ex-Soviet state’s president, her uneasy political partner, clinched a last-minute deal to head off a cut in Russian gas supplies.

Tymoshenko stood alongside President Viktor Yushchenko in the 2004 pro-Western “Orange Revolution” that swept him to power but was fired seven months after her appointment as premier. She returned to the job last December after a snap election. Officials said Tymoshenko would meet her Russian opposite number, Viktor Zubkov.

Yushchenko held rare talks in the Kremlin last week with Russian President Vladimir Putin, clinching a deal on Ukrainian debt settlement and, over time, to eliminate intermediaries in the gas trade. He is due back in Moscow this week for a summit of leaders of ex-Soviet states. Russian and Ukrainian state energy firms have come up with conflicting statements following the agreement, which means final details have yet to be agreed. Market observes and European politicians watch closely gas disputes between Ukraine and Russia, which supplies a quarter of Europe’s gas needs, after a row between the two states disrupted export in January 2006.

Relations between Yushchenko and Tymoshenko have become strained, since she returned to office as all politicians have started towards a 2010 presidential election. Interviewed on Ukrainian television last weekend, Yushchenko accused the government of negligence in ensuring gas supplies. “January arrived, it was time for the new team to pay up and it didn’t. February arrived, payments weren’t made and events brought us to the point of gas being cut,” Yushchenko said. “Everyone tried to put the blame on his predecessor ... we are talking about our country and its image and not paying for four months. It’s shameful.”

The state gas and oil company Naftogaz said, its chairman, Oleh Dubyna, would head a delegation accompanying the premier to discuss paying the arrears, put by Russian gas export monopoly Gazprom at $1.5 billion, and working out arrangements for gas shipment and distribution.

Tymoshenko hailed last week’s deal as a “great victory” for Ukrainian authorities and said it would eliminate corruption and “shadowy schemes” in the gas trade. The agreement calls for creation of two 50/50 ventures -- one to replace RosUkrEnergo, which currently oversees shipment of gas to Ukraine, and another to oversee distribution of imported gas on Ukraine’s domestic market. Tymoshenko had long vowed to discuss the intermediaries she says are unnecessary and corruption-ridden and rises in the rate Ukraine charges Russia for sending Gazprom’s supplies to Europe. It is no longer certain she will raise either issue. She and the president have also had differences over privatization and management of the state savings bank.

An opinion poll published this week shows Tymoshenko in front among leading politicians with a 26% favorable rating to 23% for Viktor Yanukovich, opposition leader and the president’s arch rival. Yushchenko scored 14.5%. (Reuters)