President of Ukraine Viktor Yushchenko: Dear Vladimir Vladimirovich [Putin], dear journalists, first of all I would like to say that I am firmly convinced that Ukraine and Russia are now in the process of forming a new quality of relations that will give both countries the chance to find acceptable, timely and correct responses to the most complex questions. I am convinced that the relations between our countries are becoming more transparent and mutually beneficial.
I would like to comment on the solutions reached regarding the gas issue. I am convinced that following the quite dramatic events that have taken place both sides have been able to reach a mutually acceptable solution that meets with the agreement of both Ukraine and Russia. It was not an easy process to reach this solution and it required a good number of compromises on both sides. But now that we have settled this issue I can say in all certainty that we have left feudal relations behind and have removed all suspicions from each other that Russia is selling gas to Ukraine at half the real price and that Ukraine is transporting this gas at half the real price. The same goes for a number of other issues, including humanitarian issues that arose in connection with the gas supply and sale issue.
I would like to thank sincerely the participants in the settlement process, and to thank you, Vladimir Vladimirovich, for the political dialogue that you supported throughout this process.
Our meeting today dealt with a number of issues among which I would like to name the following. We reached an agreement that a trade and economic committee headed by our Prime Ministers would begin work in the first quarter. A special meeting will be held for this purpose. We agreed on the start of work of a joint commission on demarcating the land border between Russia and Ukraine. This is a very important agreement. We have proposed that the bilateral commission step up negotiations on delimiting the Kerch Strait during the first half of the year and on preparing for signature an agreement on the Russian-Ukrainian state border in the Sea of Azov and the Black Sea. This is an area where we see a need to make serious progress and reach an optimum solution. We also discussed the issue of the Russian Black Sea Fleet’s presence on Ukrainian territory in Sevastopol.
We agreed that the committee would meet this month or next month and begin work on this whole package of issues that still have to be resolved, or rather, that have been settled through agreements that now remain to be implemented in practice. We can say today that we are now close to signing an agreement on readmission, something we have been working towards for several months. This is a very important agreement both for Ukraine and for Russia.
We noted today that both sides are ready to sign an agreement between the Ukrainian Cabinet of Ministers and the Government of the Russian Federation on procedures for crossing the Ukrainian-Russian state border for residents of the border districts in both countries.
We also discussed cooperation in the nuclear energy sector and issued the relevant instructions to our energy ministers and organisations that are responsible for programmes to carry out uranium mining and enrichment projects and ensure nuclear fuel supplies to electric power stations. This is an important project, quite a complex project, but we have begun serious work on it today. We hope that over the coming 3–4 months we will be able to present updated documents setting out the proposals for developing our joint cooperation in this area.
President Vladimir Putin: Ladies and Gentlemen, for my part I would like to thank the President of Ukraine for what have been substantial and very fruitful talks today. Our meeting really was very substantial. We began this year, as last year, by meeting with the President of Ukraine. Last year we reached some serious agreements on the most important areas of our bilateral relations, but today we noted, regrettably, that our relations have not been developing as effectively as they could have. The mechanisms we talked about have not been completely put in place. But we are happy to see that we have begun this year by successfully resolving a serious problem in the energy sector and reaching constructive agreements.
We are unanimous in the view that the agreement on the gas issue signed on January 4, 2006, fully reflects market economy principles. It represents our common choice in favour of new forms of relations between Russia and Ukraine, and it was made with complete respect for and considerations of the interests of both sides. In this respect I would like to say that we are very happy to see that after our many years of relations with Ukraine we now have people in Kiev who do what they say they will do. These new conditions for cooperation are also in the interests of increasing energy security in Europe and will contribute overall to building a common economic space on the European continent.
But relations between Russia and Ukraine go far beyond energy issues, far beyond disputes over gas. Viktor Andreyevich [Yushchenko] has just outlined the different issues we discussed. They include many key areas, including questions regarding the upcoming work of the inter-state commission set up in accordance with the declaration we adopted in May 2005. We agreed that all the commission’s bodies would meet in the nearest future. We have invited head of the Ukrainian Government to Moscow and we hope that invitation will be accepted. We are ready to discuss all issues regarding our work together. Furthermore, we also examined the issue of broadening the legal basis for the Russian Black Sea Fleet’s presence and operation on Ukrainian territory, as Viktor Andreyevich mentioned.
We also examined Russian-Ukrainian cooperation in the civilian nuclear energy sector. I think that this is a very promising area indeed for our cooperation as both Russia and Ukraine have great scientific and production capital in this area.
In conclusion I would like to say that we see our talks today with Viktor Andreyevich Yushchenko as giving new impetus to cooperation between our two countries, cooperation that has now been enriched with the new experience we have gained in successfully resolving complex issues. The relations between our countries have gained new potential for developing on an upward curve.
I am very grateful to our Ukrainian colleagues and to the President of Ukraine for today’s constructive dialogue. Thank you for your attention.
Question (to President of Ukraine Viktor Yushchenko): Is there any chance that the gas agreement could be reviewed given that the majority of Ukraine’s political class rejects it and that this has already led to yesterday’s resignation of the government?
Question (to President of Russia Vladimir Putin): Do you share Gazprom’s view that Ukraine has been stealing Russian gas?
Viktor Yushchenko: I think that what happened yesterday in the Ukrainian parliament is in no way related to the letter and the spirit of the bilateral agreement that we signed. Rather, it is a way of politicising issues that should be far removed from politics.
I am certain that the agreement has been drafted professionally and I am familiar with each of its provisions. On three or four occasions I spoke with Vladimir Vladimirovich on a political level about those aspects of the agreement concerning the political (and not the economic) side of the question. What I can say today is that healthy compromises have been reached at both the political and economic levels. Today we can say that for the first time in this sector — and you understand how important this is, for this is perhaps the core of our business relations – market order has been established. Today, each side knows at what price services will be provided, at what price the goods will be sold and what costs this will represent for the national economy and the relevant organisations. Attempts to politicise this issue will only damage the excellent result that we achieved together.
Vladimir Putin: Regarding the question put to me, I can only repeat what I have said earlier. We see the Ukrainian people as a brotherly people and we see Ukraine as our closest neighbour and partner. I think that in our relations with a partner such as this, and indeed, with any member of the international community, one should speak properly and be careful about the expressions used. But relations between economic actors can be controlled in quite transparent fashion by specialised international organisations.
I am pleased to see that the participants in this process have reached a mutually acceptable compromise that will most certainly benefit the development of relations between our countries not only in the energy sector but also in the whole range of areas in which we cooperate.
Question (to Vladimir Putin and Viktor Yushchenko): Russian gas in Ukraine costs $230 for 1000 cubic metres, so where is the compromise?
Viktor Andreyevich, the relevant contracts have been signed, but how is Ukraine going to develop its gas transport system: with Gazprom, which has the gas reserves, or not? You said that Ukraine will implement in full all the agreements it signed, but what do you expect in this respect from Russia?
Vladimir Putin: Regarding the price, gas from Russia accounts for one third of Ukraine’s gas imports. What is important for us is not today’s price of $230 per 1000 cubic metres, but the European price calculation formula. The gas price today is $230, but tomorrow it could be higher or lower depending on price fluctuations on the world energy markets. And if the price goes down, we will of course agree to this.
The compromise lies in the fact that we have taken a step towards our Ukrainian partners and have agreed that market prices will also apply to the transit of Russian gas to Europe. This is the first compromise that was reached.
The second compromise lies in the fact that, as you know, Ukraine buys two thirds of its gas in Central Asia, and the prices are a lot lower on this market. The average price on the Ukrainian market today is completely acceptable in our eyes and in the eyes of our Ukrainian partners.
The third compromise is that we have agreed with our Ukrainian partners to work together in third country markets, including on re-export. This is very important for the Ukrainian economy.
Viktor Yushchenko: What is important for Ukraine is that we pay $95 for gas at the border. Second, we have changed the transit prices and we have agreed on an increase of 11 billion cubic metres of Russian gas being pumped through this year. This means that in 2006 we will reach a record figure of 121 billion cubic metres for Russian gas transiting to Europe. I think that this is a good answer to all the problems that really were serious for both sides.
Regarding our cooperation policy, we would like to declare officially that we understand that Ukraine is a transit country and that this is a unique service that Ukraine can provide to the gas suppliers in Europe. We did not spend so much time on this issue today, but in our telephone conversation and on earlier occasions we spoke about the fact that, at its upcoming meeting, the energy commission would examine the development of new projects where both Ukraine and Russia can strengthen their positions. I think it is very important for all of us to show today that Russia and Ukraine are a crucial and effective corresponding pair that can work together to ensure stable and guaranteed supplies and transit of gas to the final consumers. Here we also have the question of the consortium, the construction of the new Bogorodchany-Uzhgorod pipeline and the interesting matter of building a new gas pipeline – all issues that the commission must discuss as part of its work – Novopsckov-Uzhgorod, here, in my opinion, we have an interesting issue of building an Aleksandrov Gai -Novopskov pipeline and other matters.
In other words, the commission has plenty on its plate. These are areas where both sides stand to gain and we are open in this process.
I would like once more to say firmly that Ukraine will not move one iota from implementing in full the agreements it has made with Russia and with our other partners. We understand just how important this is. Pardon my making this comment but on January 1 when problems arose with gas transit to Europe, we covered around 80 percent of the shortfall with gas from our own reserves, putting it into the transit system with the sole aim of not inconveniencing anyone on this market. Perhaps these efforts were insufficient, but they were completely sincere for our part and it was not at all our aim to resolve the dispute using non-market methods.
Regarding Russia, we are at an excellent stage for developing bilateral relations now. We are genuinely moving over now to the principles of personal friendship that gives us reason to speak of excellent prospects for our relations. Happily, I can speak only in positive terms because I believe in the words and in the agreements that we have reached, including here today. These are serious words, a serious solution, and I think that both the Russian and Ukrainian peoples will feel its benefits.
Vladimir Putin: The President raised only one question during our talks today: on Russia’s fulfilling the commitments it has made, including with regard to the gas supply volumes needed by the Ukrainian energy industry. For my part I can say here and now that I will instruct the Russian Government to help Gazprom meet all its commitments, if necessary, though such help is not needed at present, and I personally have no doubt at all that these commitments will be met.