Ukrainian officials will meet today with Russian officials and representatives from state-owned energy giant Gazprom to discuss Russian natural gas supplies to Ukraine. There is no clear timetable for the talks, as quarreling between the two sides has persisted and indications are that myriad issues are still unresolved. Ukrainian Energy Minister Volodymyr Demchyshyn recently stated in an interview with the Wall Street Journal that Kiev seeks to double transit fees it charges Gazprom. Currently, Gazprom is charged $2.88 to ship 1,000 cubic meters 100 kilometers, though Kiev would like to see the rate ascend to $5.50. Demchyshyn intimated that other issues still stood in the way of a deal’s completion, though refrained from providing additional detail.

Gazprom recently received an additional $15mn from Ukraine’s Naftogaz as an advance payment on forthcoming transfers of natural gas. Small payments have been made in lieu of larger sums due to Ukraine’s precarious economic situation. It is expected that negotiations between the two sides, if deemed successful in Ukraine, would afford Kiev greater liquidity with which to make larger payments to Gazprom.  While it is unlikely that Russia capitulates to Ukrainian demands, the continuance of sanctions imposed against Russia and the state of oil prices could leave Moscow with few other options.

Follow us on Twitter: @SteppeDispatch

News Briefs:

• Afghan President Ashraf Ghani has drawn criticism in Kabul for centralizing power around the presidential office. One of Ghani’s campaign pillars was a promised decentralization of powers to allow for greater inclusion in Afghanistan. His actions, as detailed in a recent New York Times article, indicate that he has acted to bring in billions of dollars, purportedly to fight corruption, into his “direct purview.” Plans for a unity government formed by Ghani and Abdullah Abdullah, have stalled, leaving numerous government posts unfilled.

• Iranian officials claim that it could add up to one million additional barrels of daily oil production, should sanctions be removed. The potential for Iran to expand its oil production is well documented, though the potential for Iran to increase its production even further will prove much more complicated, industry experts say. The technology that Iran’s state-owned oil entities employ is outdated, as evidenced by slows in production over the last three years. In order for Iran to reach peak levels of production billions more in foreign investment will be necessary.

• A proposal submitted by the World Bank indicates that Tajikistan will finally begin to supply Pakistan with surplus electricity by the end of 2018. The export of 1,000 MW would come at 9.35 cents per unit, and will be supplied chiefly by Tajikistan. Kyrgyzstan will also export 30% and Afghanistan, another recipient of surplus energy, will consume approximately 300 MW of exported energy compared to the 1,000 MW expected in Pakistan.

• Vladimir Putin issued a statement urging Russian businesses to return funds to Russia. Capital outflow has become a major issue of concern for Russia as many international companies have ceased to do business there rather than risk being sanctioned. Putin’s appeal is directed mainly to Russian companies that keep their funds offshore, and included a warning that “a number of countries” could make attempts to seize Russian capital rather than allow it to return to Russia.

• The Chinese government has indicted the former chairman of Chinese National Petroleum Corporation, a state-owned entity, as part of a government anti-corruption program. Jiang Jiemlin will be charged of abusing state-granted powers and of accepting bribes. Chinese authorities allege that the bribes led to a substantial loss in public money. Ongoing investigations include several other high-ranking CNPC officials, according to Chinese officials.

• Press reports from India and Pakistan give the impression that progress may soon be made in the much-delayed TAPI pipeline. Most importantly, recent reports indicate that progress has been made in talks with Turkmen officials who had previously been opposed to granting a stake in its gas fields to foreign companies. New determination by the Turkmen government to diversify its natural gas export markets has reportedly led to the resolution of some key issues. Russia has largely divested in Turkmen gas, and while China is a large-scale partner of Turkmenistan, Ashgabat fears it will become over dependent.