A gas supply agreement signed yesterday by the presidents of Russia and Ukraine dramatically changes the prospects for both oil and gas shipment across and under the Black Sea; extends Russia’s Black Sea Fleet lease of the Sevastopol base by another 25 years; and costs Gazprom nothing.
The terms of the deal promise to change the future investment prospects for the Ukrainian ports of Odessa and Yuzhny at the expense of Burgas, Bulgaria. Constanta , Romania, will also gain at Burgas’s expense if the new agreement changes the routing for Gazprom’s South Stream gas pipeline across the Turkish and Bulgarian seabeds, to permit the shorter seabed route via Ukraine and Romania.
According to the press announcements so far, Presidents Dmitry Medvedev and Victor Yanukovych have agreed to a 30% discount price for 30 billion cubic metres of Russian gas to be delivered to Ukraine this year, and 40 bcm to be delivered annually from next year to 2019. The effective purchase price for Kiev will be about $230 per thousand cm, well below the $334 asking price from Gazprom, which has been on the table since the start of this year. The export volumes to Ukraine for this year have been lifted from 33.75 bcm, agreed with Naftogaz-Ukraine last November, to 36.5 bcm; the discount will cover the first 30 bcm sent to Ukraine, and the first 40 bcm thereafter.
The savings, estimated at $40 billion ($4 billion per annum) over the term of the agreement, will be applied to the extension of the Sevastopol naval facility lease. But Gazprom will not lose this amount from its revenue stream. Instead, a zero export duty for Gazprom deliveries to Ukraine will be introduced, which is equivalent to the 30% discount in pricing. As a result, the Russian government will receive less tax – about $3 billion less per annum, according to one bank estimate.
By removing the risk of Ukraine-related disruptions of gas flows and Gazprom’s sales revenues to Europe, the agreement relaxes a costly drag on Gazprom’s share price and market value. The company’s current market capitalization is $141 billion, down 6% in the year to date, trailing well behind Russia’s other oil and gas companies, and behind the RTS stock market index as a whole.
A Ukrainian offer is also on the table for Gazprom to take equity in Ukraine’s gas distribution and pipeline system to further reduce the likelihood of supply cutoffs for European consumers in future.
 

Prime Minister Vladimir Putin reacted in a most admirable, humane and graceful manner to the death of Polish President Lech Kaczinski and 96 leading Polish citizens in a plane crash in Smolensk, Russia. The crash robbed Poland of a whole generation of political, intellectual and military leaders. As Poland and Europe stood silent and stunned, Putin led Russians in grief.

It was yet another display of natural leadership by the man who has established himself as the “strongman” of Russia and cast himself as an iron-man. Such emotional display has been missing throughout his political career. Whether it was the Kursk Submarine disaster or Nord-Ost theater seize, Moscow terror attacks or the Beslan school massacre by Chechen terrorists - Putin has always been been a combative and steely leader.
Poles and Russians seem not indifferent to this new side of Putin. Putin moved beyond display of personal grief. Russian state television showed a Polish film on the World War II era Katyn massacre in which Stalin ordered killing of over 15,000 Polish troops. It was a rare admission of historic guilt and a fitting tribute to the Polish leadership that perished on a trip to the site of Katyn massacre.
But just as a new and more personable facet of Vladimir Putin emerged from the tragedy, the personality of Russian President Dmitry Medvedev also came under spotlight. Russians could not but help notice the shell shocked Russian President in contrast with able and emotive Vladimir Putin.
While Putin appeared sad and shaken by the tragedy, Medevedev seemed lost and clueless. He seemed eminently unsuited as the mourner-in-chief of Russia. He conveyed neither comfort nor grace in the aftermath of the accident. His stiff demeanor after Moscow Metro blasts was also too scripted. He seemed too well heeled and buttoned up. It is to be wondered whether Putin has been holding Medvedev back from revealing himself so as not to overshadow him or if the man really is a cipher.  
Poland might have been robbed of its leadership by fate but it is not politically bankrupt. Democratic societies can rise through and beyond tragedies. No matter how well man scripts political dramas, God always gets the last word on stage. Looking at the smoldering remains of Smolensk plane crash Putin might well have been pondering if he has factored in fate and mortality when planning political succession in Kremlin. Perhaps he has left Russia too vulnerable by placing a young and artificially constructed leader in charge.
 
 

Trade ties may deepen, visitor numbers may enlarge, and calls may grow for both sides across the Taiwan Strait to formally end six decades of war. All recent signs show however that amid the buildup of firepower trained at each other, China’s and Taiwan’s militaries are still light-years away from establishing the mutual trust necessary to end hostilities. - Jens Kastner (Jul 29, ‘10)

Myanmar’s Senior General Than Shwe rounded off a five-day visit to India on Thursday after securing pacts that will boost security and economic cooperation between the countries, while also receiving US$70 million in grants. The red carpet laid out for the junta’s leader is a sign of Delhi’s decision to quietly nudge Myanmar on issues of concern, while playing down sensitive issues such as restoration of democracy. - Sudha Ramachandran (Jul 29, ‘10)

Village chiefs in the Shindand district of Afghanistan’s Herat province say the “Village Stability Program” run by the United States is creating private militias, while the US says the scheme only provides limited training to volunteers. For the Taliban it’s simple, anyone “collaborating” with the enemy will pay the price. (Jul 29, ‘10)

George Soros-backed SKS Finance, which makes money by lending small sums to India’s poorest businesses, is raising US$347 million through an initial public offering. That offends critics who baulk at the profits created by the 30% interest rates that go with such loans. - Raja Murthy

Northeast Asia after the Cheonan affair is more volatile than it has been since the end of the Cold War. With North Korea off the hook, South Korean President Lee Myung-bak has lost the most. A reversal of his policy toward Pyongyang would stem the loss and, more importantly, could restore some sense of stability to the region. - Yong Kwon (Jul 29, ‘10)

At least 138 people have been killed in a boat accident in Bandundu province in the Democratic Republic of Congo.

Four airmen were killed on early Wednesday evening when a large military cargo plane crashed at Elmendorf Air Force base in Anchorage, officials said on early Thursday.