The Ukraine now claims that it cannot pay its debt

Gazprom this year celebrates the 25th anniversary of the signing of its first large contract with our French partners. During this period, Gazprom failed in any of its commitments and has always honoured its contracts, even during the period for the less chaotic the fall of the Soviet Union and the transition to a market economy. This should be sufficient to invalidate any concern related to the security of supply.

However, our litigation with the Ukraine could create a degree of concern. It is true that 80 of the gas that we provide to Europe through Ukrainian territory.

But the Ukraine is also a longtime Gazprom client and we want to continue our role of provider, transparently and the market conditions. However, it seems that an unhappy Christmas tradition is that our problems with our Ukrainian partners returned at this time of year. The current conflict is due to the fact that the Ukraine does not want or cannot pay the gas that we him already delivered and that the current contract expires on December 31, 2008.

October 2, Russian Prime Minister Vladimir Putin and his Ukrainian counterpart Yuliya Tymoshenko have signed a memorandum paving the way for the renewal of our supply contract, with a gradual transition towards the price of the market by 2011. I emphasize the word "progressive", because we recognize that it would be inappropriate to require the Ukraine immediate alignment with these conditions. The agreement opens the way for the termination of intermediation of RosUkrEnergo, responding to a recurrent request for the Ukraine. All this was decided on the express condition that the Ukraine rule first debt to Gazprom.

Unfortunately, the Ukraine has violated this agreement. Today, unresolved debt reached more than 2 billion, which is not a thin amount to our eyes. Gazprom is a commercial organization, a company to its shareholders and has significant investment commitments. No provider can afford to supply its customers without being paid. If the customers of gas of France did not pay their debts, they would no longer receive gas. In these conditions, no commercial company in the world renew a contract with the Ukraine on 1 January.

I still once recalled that we have tried several times to solve the problem of the Ukrainian debt and proposed various solutions to Naftogaz for this purpose such as for example the prepayment by Gazprom of the fees due in respect of the transit of Russian gas to Europe.

The Ukraine now claims that it cannot pay its debt. Without seeking to minimize the impact of the economic crisis on the country, we wish to stress two elements. On the one hand, the Ukraine buy gas at a preferential rate: 179,50 dollars per 1,000 cubic metres (the France pay $ 450), is by far the lowest price paid by a European country. The other countries of the former USSR have most successfully completed their transition to market prices. On the other hand, many other countries clients of Gazprom not to mention the Russian economy itself! are affected by the crisis and have not refused to settle their gas bill.

Concerns about our litigation with the Ukraine are also in the fact that despite its commercial and bilateral nature, it could have repercussions on Europe. That is why the problem of the Ukrainian debt is also a European problem. We have already ensured our partners in full respect of the contractual obligations which bind us to our other European customers. We will do everything in our power to ensure the stability of our deliveries of gas to Europe. But if it is something that we cannot guarantee, compliance with its own international commitments Kiev. It belongs to the Ukraine to ensure that the Russian gas transit through its territory and reach the European market safe. And this regardless of the status of shipments destined for the domestic market. Therefore, it is essential that the European friends of the Ukraine relay this message.

Moreover, it is also the responsibility of the Ukraine to invest to maintain in a State of its network of gas pipelines; for the moment it is not the case, the Ukraine refusing even any intervention by foreign investors. We believe we that the Ukrainian gas transportation system is not at its European transit function.

The Ukrainian crisis gives us the opportunity to recall that Gazprom today is a business changing: a simple Russian society with interests abroad, it has become a multinational to the Russian roots. As a company, it is obliged to respect and to satisfy its shareholders, customers, and partners, as in France GDF Suez and Total, with which we operate today the gigantic Shtokman Deposit. We are very satisfied with these partnerships and are all reasons to believe that our friends of GDF Suez and Total are also. We will continue to do everything to develop the energy sector both in terms of investment security. Gazprom agrees to make all its technical and human skills to contribute to the achievement of these objectives. The time has come to Kiev to demonstrate political will and common sense.