The Cabinet, Fuel Producers And Traders Agree To Cooperate.

The Prime Minister, owners and top managers of major Ukrainian oil market participants signed a memorandum on long-term partnership and cooperation yesterday. According to the document, the government and businesses will form a council (to be headed by Vice PM Andriy Klyuev), which will work on all the issues covered in the memorandum. The parties promised to intensify and coordinate their efforts in many aspects including the modernization of refineries, fuel quality improvement, maintaining competitive environment and  market regulation. All the major Ukrainian oil businesses signed the memorandum: TNK-BP, LUKOil, Alliance, Ukrtatnafta, Ukrnafta (UNAF: HOLD), Alfa-Nafta, Kontinium, Galnaftogaz (GLNG: BUY), Tatneft and Donbassnaftoproduct. Vladimir Nesterenko: It is good the government sat down with  oil businesses, though this agreement may not be ideal for all participants. Although the memorandum encompasses virtually all the controversial questions the state and the oil businesses traditionally have clashed over, its major goal is to assist the government in retaining a balance between the interests of the state (and hopefully, society) and those of private businesses. However, from what we have seen there are no concrete commitments embedded in the agreement. Whether this cooperation is productive or harmful depends on the mechanism of realization for the agreements. We’ll see whether Klyuev succeeds, but at the first glance, the equilibrium looks unstable.