By Zoe Koulouris

04-12-00 Moscow and Kyiv have been at loggerheads for several months now concerning the construction and privatisation of Ukrainian pipelines. But there may be some light at the end of the tunnel now that Kyiv has announced it will not obstruct the construction of a bypass pipeline, which would sidestep Ukrainian territory, or use political measures to stave off privatisation of its gas industry. And in the meantime, Russia and Ukraine are taking steps to resolve another issue that touches on the pipeline question.
Russia has said it will rescind all its "anti-dumping claims" to allow for the importation of Ukrainian large-diameter pipes. Specifically, Russia's Economic Development and Trade Ministry will not include large-diameter pipes made by Ukraine's Khartsyzsky Mill in its list of suspect products. Russian enterprises were instrumental in initiating the anti-dumping process against the mill, which resulted in measures being taken to restrict Ukrainian pipe imports to 450,000 tpy.
The Russian pipe-making lobby, Pipe Industry Foundation, launched an inquiry into imports from Ukraine on March 17, 2000. According to the foundation, pipe makers and steel mills, which supply the pipe mills with blanks and strips, were getting the short end of the stick.

Kyiv is clearly annoyed with the present conditions. Currently, Russia is allowing the import of only 450,000 tons of pipes, and the Ukrainian government would like to see that number rise to a minimum of 800,000 tons, Ukraine's Deputy Economic Development Minister Andrei Honcharuk has said. Since January of 2000, Ukrainian pipe shipments have skyrocketed by 120 % to 73,000 tons per month, Russian experts said. Russia is currently the biggest importer of Ukrainian pipes, buying 70-80 % of that country's output.
Russian Economic Development and Trade Minister German Gref said recently that his country might respond to the situation by implementing a 40 % import duty on Ukrainian pipes. But Honcharuk said that on the event thatMoscow introduced a 40 % duty on import of Ukrainian pipes, production of the pipes would totally cease in Ukraine. And according to Dmitry Kulikov, chairman of Ukraine's Interpipe group, if prohibitive duties are levied against Ukrainian pipes, the industry would be cleaned out.
Russia's First Deputy Minister of Economic Development and Trade Maksim Medvedkov remains optimistic, saying both countries are sure to come to a sound resolution on this heated topic. "We came close to outlining the drafts of documents on limiting Ukrainian pipe shipments at future talks, but again we were not able to agree on the extent of those limitations," Medvedkov said.

Undoubtedly, Ukrainian Prime Minister Viktor Yushchenko will make sure to bring up this issue the next time he pays a visit to Moscow. Kyiv may be trying to prove a point with all this. That is, Kyiv wants to let Moscow know that although Ukraine was once a member of the former USSR, it is a strong nation in its own right and can battle it out with the best of them. As such, Ukraine is not likely to let this one go through without a fight. The CIS Interstate Coals and Metals Association will be approached about this issue.
Meanwhile, one group that does not want import restrictions on large-diameter pipes -- especially 1,420-mm pipes, because Russia does not make them -- is Gazprom. The Russian energy giant is expected to require 500,000-600,000 tons of pipe in the year 2000, including 50,000-60,000 tons of Ukrainian-made large-diameter pipe, according to Yelena Sorokina, deputy metals officer at Gazprom's procurement arm Gazkomplektimpeks. But even though Gazprom hopes to purchase some 180,000 tons of pipe from Ukraine, Russia is not quite ready to supply Gazprom with large-diameter pipes. Hence, Gazprom will be knocking on Ukraine's door once again.
Undoubtedly, all parties involved in the pipe business would be affected by any restrictions that Russia chose to impose. All sides would have to fork over greater amounts of money if the cost of pipeswere to climb.