CEO of Naftogaz of Ukraine Andriy Kobolyev gave an video-interview to CNBC (USA)
Andriy Kobolyev, CEO of Naftogaz of Ukraine, gave an interview to CNBC (USA).
The interview took place on October 9th, 2014. He spoke about the problems of natural gas supplies to Ukraine in winter, as well as about relations between Ukraine and Russia, Naftogaz and Gazprom in the gas sector.
See the key thesises in the interview an video below.
Meet the man trying to get Ukraine through winter
Thursday, 9 Oct 2014 | 1:21 PM ETCNBC.com
Andriy Kobolev has one of the toughest jobs in the energy industry. He's only 36 years old, but already the CEO and chairman of Naftogaz Ukraine, a company he refers to as one of the biggest energy monopolies in Europe. It's certainly the biggest in Ukraine.
Experts say the outcome of negotiations between Naftogaz and Russia's state-controlled gas giant, Gazprom, could determine whether gas supplies to Ukraine and even Europe will be cut off this winter.
Kobolev is in talks with Ukrainian President Petro Poroshenko and Prime Minister Arseniy Yatsenyuk about his discussions with Gazprom, a company he said acts like the "Russian army." Russia regularly uses its abundant gas supplies for geopolitical leverage, and has done so more since it annexed Ukraine's Crimea region and began a campaign that most observers agree is designed to destabilize the country.
Kobolev said Gazprom CEO Alexey Miller understands the financial consequences of doing things like cutting gas exports to countries that depend on the fuel to get through winter, but he claims that Miller made the decision anyway because he had no other choice.
"They've cut gas to Europe by 50 percent, which means 50 percent less revenue," Kobolev told CNBC.
"It's the overall geopolitical strategy of Russia to show to Europe and Ukraine how important their energy supply is. But the way they are showing it, they may be good in tactics, but from strategic point of view, they are losing both Europe and Ukraine—firstly as a market and secondly as a reliable partner," he said. "That's something when destroyed is difficult to get back."
Russia denies that it seeks to use gas exports for political leverage. It also denies supporting pro-Russian rebels who are fighting within Ukraine against its central government. The country has been hit by a series of economic sanctions from the United States and European Union as a result of its actions in Ukraine.
Naftogaz brings in about $10 billion in revenue, but it's not profitable. Up until May of this year, the company bought Russian gas at market prices, then sold that gas to Ukrainians at cut rates, with the Ukrainian government taking the losses.
Kobolev said that's changing, as gas produced domestically is much cheaper than imported gas.
"We are planning to make one wholesale price for all consumer categories. That wholesale price will allow the government and Naftogaz to receive enough revenues to cover expenditures," Kobolev said. "Those who need direct subsidies will get in monetary form, not in gas form."
He believes that by enacting such reforms, Naftogaz could eventually become profitable. The energy giant already has raised prices for Ukrainians, but Kobolev is still concerned that he may not be able to reach a deal with Gazprom to continue imports.
"It's very simple position from Ukrainian side. Give us a contract, we sign the contract. This contract guarantees that there is gas supply in the winter."-Andriy Kobolev, chairman and CEO, Naftogaz
He said that negotiations are not going well; Naftogaz has engaged the European Commission to try to help it come to a resolution. Kobolev said there is a high probability that no deal will be reached at all, and that Naftogaz will have to take the issue to court.
"We can negotiate for a long time," he said, "but winter is coming, and gas is needed."
Gazprom says Ukraine still owes it billions of dollars worth of gas payments. Kobolev said those debts will be paid if there's a new contract forthcoming.
"We are ready to pay our debts provided there is a deal on the table," he said. "It's very simple position from Ukrainian side. Give us a contract, we sign the contract. This contract guarantees that there is gas supply in the winter."