European Spot Gas Markets, September 9, 2005
Victor Yushchenko, the president of Ukraine,
sacked his entire government on Thursday, claiming that ministerial infighting
had damaged "team spirit" and affected the basics of state policy.
The dismissals include prime minister Yulia
Tymoshenko, and the head of the security and defence council, Petro Poroshenko.
Both clashed in cabinet and Poroshenko has been tainted by allegations of
corruption including nepotism and pressuring the judiciary. Poroshenko claims
the accusations to be "groundless and absurd".
Professor Jonathan Stern, director of gas research
at the Oxford Institute for Energy Studies, said the implications for the gas
sector would depend on who was appointed to the new cabinet: "In the short term
it freezes everything. The hope must be that some constructive people emerge in
Kiev who will not spend all their time fighting each other and trying to get
money for themselves."
Stern added: "The key issues are balancing
Russia-Ukraine supply with Turkmen-Ukraine supply, and the institutional and
contractual arrangements which are in place and may be put in place for both
sets of supply and transit."
William Browder, c.e.o. of Hermitage Capital
Management in Moscow, told The Heren Report that Yushchenko made a big mistake
by appointing Yulia Tymoshenko, known widely in Ukraine as the "the gas
"A woman who is the equivalent of Mikhail
Khordokovsky became prime minister," he said.
Olexander Turchinov, the head of Ukraine's
security service, was also removed from office. He was the man charged with
investigating whether the Turkmen gas trade is indirectly controlled by Semyon
Mogilevich, a Ukrainian-born Russian high on the FBI's wanted list.
A senior figure in Russian finance told The Heren
Report that news of Turchinov's resignation was "very disturbing". "We were
quite happy to see that investigation [into Mogilevic] going on," he said.
Mikhail Korchemkin, an expert in Russian gas, said
that in the long term the political manoeuvring in Ukraine would have little
impact on the gas sector. "In terms of natural gas, what matters are volumes,
transits and production, that's it. It's very much like Russia from the
Communist era through the turbulent 1990s to today - gas exports have never