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18.11.2009  
  Vedomosti, Alexandra Terentieva, Maxim Tovkailo  
 

Putin Delivered a Judgment


 
 

“We have managed to resolve a long-lasting dispute <...> the parties confirmed the prices, deadlines and volumes of supply by signatures”, — said Putin with pride when opening the meeting on the problems of gas and petrochemical industry in Nizhnekamsk.  He did not get into details but entrusted his Deputy Igor Sechin and the
Anti-Monopoly Service with a task to ensure that the process is fully completed and that companies sign a contract. The point was the disagreement between KOS and “Sibur” (“Gazprom’s” agent) in regard to the amounts and prices on raw materials supply, as the Premier’s press-secretary Dmitry Peskov explained.  
The major supplier of raw materials to KOS is “Gazprom dobycha Orenburg”. It sells half the ethane and processes the other half according to the processing agreement.  Now KOS must sign the agreement on purchase of ethane for five years or more  - this is the condition, under which the company will get a credit from the Sberbank to the amount of RUB 35 billion against state guarantees. KOS needs money urgently: it must repay RUB 27.9 billion to the banks by the end of the year. 20% of the payments are overdue already, as indicated in the company’s report for the III quarter. Also KOS, probably, will have to pay off the Eurobonds to the amount of USD 200 million, should the holders call for redemption.  
«Gazprom» didn’t refuse to enter into a long-term agreement; however the parties were unable to agree on the price. By the order of the Government the Federal Antimonopoly Service elaborated a formula of ethane’s price bound to the cost of polyethylene (KOS’s final product). The recommended price was RUB 6319 rubles, as the Head of the Service Department Teimuraz Kharitonashvili said: in general it is comfortable for KOS, but not for “Gazprom”. It is unknown under which price the companies put signatures. Yesterday, the formula for KOS and “Gazprom” was calculated half a day, a participant of the meeting shared the information with “Vedomosti”.  The representatives of the parties do not comment on the agreements.  
The recommendations to sign long-term agreements were given also to other suppliers and consumers of raw materials, including “Salavatnefteorgsinez” (SNOS) and “Bashknim”, as indicated in the draft minutes of the meeting (the text is available to “Vedomosti”, its content was confirmed by two participants). This is a reasonable policy, which allows planning investments, the General Director of SNOS Damir Shavaleev says (the plant purchases raw materials from “Gazprom” on the basis of long-term contracts).      
Supply of raw materials is one of the major problems in the industry, an analyst of “VTB Capital” Elena Sakhnova believes: since the Soviet Union times many companies have been depending on each other. In 2004 Angar polymer plan stopped ethylene supply to “Sayanskkhimplast” – the companies failed to come to agreement on the prices, and in 2007 “Gazprom” shut off ethane supply to KOS claiming the company had breached the processing agreement. Long-term agreements, however, are not always good, Sakhnova warns: a year and a half ago Putin recommended them to coal-mining and metal-working companies, however now these agreements aren’t fulfilled.
There is another problem - an access to infrastructure, Premier stated. “All independent enterprises must have a nondiscriminatory access to them [pipelines]”. By April 2010 FAS must develop documents preventing the pipelines’ owners from abusing this advantage, as indicated in the draft minutes. For example, “Kaustik” in Sterlitamak accused  “Nizhnekamskneftekhim” of setting too high tariffs for pumping ethylene through the Salavat-Kazan pipeline and attempted to forejudge RUB70 million, though unsuccessfully. Control over the actions of the infrastructure owners will make the relationships between the companies easier, but it is important not to go too far.  

 
 
 

 

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