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Quest Means Business
Exclusive Interview: Naftogaz CEO Wants European Gas Prices for Ukraine; Putin's Energy Warning; Gazprom Advisor on Ukraine Gas Crisis; Weibo IPO; Roller Coaster Dow Ends Down; European Markets Up; Nobel Prize- Winning Author Gabriel Garcia Marquez Dies; Audi America President at New York Auto Show
Aired April 17, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: Not a lot to make a fuss and hullabaloo about. The Dow was down, then up, then down, then up, and when all was said and done -- and he hit the hammer again and again and again -- it was off on Thursday, April the 17th.
Tonight, an international exclusive interview. The chief exec of Ukraine's energy company tells me how he's going to stand up to Gazprom.
We'll be live in Kiev as the prime minister gives CNN his reaction to the diplomatic talks in Geneva.
And a big win for Weibo. China's answer to Twitter has a rip-roaring NASDAQ debut.
We have a very busy hour together. I'm Richard Quest, and of course, I mean business.
Good evening. Tonight, the man who is responsible for keeping the gas flowing into Ukraine may well turn to Europe, not Russia, for its energy needs. The chief executive of Ukraine's state-owned Naftogaz has refused to pay the price currently set by Moscow. And he says a solution may lie by getting gas from the West. He's Andriy Kobolev, and he's Naftogaz's chief executive officer.
The man is just 35 years old. He's been in the top job for less than a month, and he faces three major challenges. The first: tackling corruption within the energy sector. The police have detained the former CEO in connection with a corruption investigation.
Secondly, weaning Ukrainians off energy subsidies from Kiev. How can the company survive without subsidies? Kobolev has warned households will have to pay up to 50 percent more for gas after Russia raised the price and the IMF and international lenders are demanding the government subsidies be cut.
But the biggest and most immediate crisis: Kobolev must try to stop Russia's Gazprom from cutting the country's gas supply completely. Forty- five million Ukrainians depend on Kobolev from succeeding.
I spoke to Andriy Kobolev in an international exclusive interview, and I asked him how difficult it's going to be to keep the lights on in Kiev.
(BEGIN VIDEOTAPE)
ANDRIY KOBOLEV, CEO, NAFTOGAZ: I believe the solution to this particular issue is somewhere between Ukraine and Europe. Because for us to keep gas flowing means that we need to start getting gas at least European price or market price. We're definitely not going to buy gas at price close to $500.
And the solution we are currently looking for is to get at least European price for gas. If we get the price, it's -- then the problem is resolved. Until we get this, there are problems both for Ukraine and for European consumers.
QUEST: So, you're telling me tonight that you hope in future not to buy gas from Gazprom and from Russia, but to replace that source with European gas?
KOBOLEV: Probably yes. However, we still remain with hope the position of Gazprom will change. We believe that the price for the first quarter of 2014 was market and was adequate to exist in market conditions in Ukraine, which I cannot say about price Gazprom is claiming to start charging Ukraine from the second quarter.
That is why keeping that option open and negotiating with our Russian colleagues, we have not received a formal reply to our request that if the price remains stable, we are ready to cover all existing debts.
However, if we don't find a compromise with Gazprom, we still hope to find a compromise with our European partners, who enjoy much lower price. And if we reverse gas flow in sufficient amount, that will also be a solution.
QUEST: Ultimately, though, it -- what's happening here, surely, is Russia is playing politics with the gas supply to Ukraine. And frankly, no matter what you negotiate, they want to squeeze you. You realize that.
KOBOLEV: It's difficult for me to comment on plans of our Russian colleagues. However, the more they squeeze Ukraine, then the situation is getting worse for Russian gas supplies in Ukraine in the mid and long term. Because I'm absolutely sure we'll find a solution.
But if we find a solution which is not Russian gas, that very likely will lead to the situation when Ukraine will not be buying Russian gas for quite a long period of time. And losing such a high market -- such a huge market, sorry -- I'm absolutely sure it's not something that Gazprom would prefer to do.
QUEST: Where in Europe will you buy reverse gas? And will this be gas that has come from Russia through Ukraine into a European country, and then back to Ukraine again?
KOBOLEV: Formally, we currently have our first contract with one of the European suppliers, and formally, we're also negotiating direct gas supplies from European countries. There is gas that flows into Europe from different directions, and if we have a contract and we have ability and capacity to transit that gas from Europe to Ukraine, then again the problem is solved.
But here, the problem is not the source of gas, but the problem to unlock sufficient capacity for gas inflow to Ukraine. And as we have found out recently, it's not the problem of Europe's gas, it's the problem that the main transit line that goes into Ukraine from European countries is illegally locked by Gazprom expert, which we believe is not in correspondence with European laws.
QUEST: Right.
KOBOLEV: And we are going to unlock that and change very soon.
QUEST: See, this is the problem, isn't it? Whichever way you cut this, whatever you try to do, Gazprom and Russia is basically -- let's be blunt -- they are destined to try and ensure you do not get their gas.
KOBOLEV: This problem is of a legal nature, which I think is a good thing. The bad thing is this is a tradition that has occurred right after the collapse of the Soviet Union. Unfortunately, Gazprom, for many European companies and countries, remains in the position of the key gas supplier, covering Ukrainian borders as the areas of their control.
That is a pure legal thing, and we think if there is mutual intention of both Ukraine and European countries to change the situation, it is absolutely possible to do within very short time.
(END VIDEOTAPE)
QUEST: And later in the program, you'll hear more from the Naftogaz chief exec on his plans to help Ukrainians adjust to paying more for gas and his own ability to run the company.
Now, Vladimir Putin has given Ukraine one month to pay off its $2.2 billion gas debt. The Russian president was speaking in a television interview in Moscow, where President Putin says if Kiev can't settle the bill in time, then Gazprom will make it pay in advance, threatening supplies. He says Russia is prepared to take tough action, and hopes it doesn't come to that.
(BEGIN VIDEO CILP)
VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translator): Is it possible to completely stop delivery of gas? I think it's really not realistic. But better than losing blood, but I cannot imagine this happening.
(END VIDEO CLIP)
QUEST: President Putin. The president of the European Commission has written an open letter to Mr. Putin warning him not to risk an energy crisis. President Barroso said, "The contractual reliability of the Russian Federation as a supplier of gas is at stake in this matter."
So, two sides of the point of view, and you've already heard the Ukrainians'. Andrey Konoplyanik is the former Russian deputy minister of fuel and energy and an advisor to Gazprom Export. He told me that Russia expects Ukraine to pay its debts as soon as it has the money to so do.
(BEGIN VIDEOTAPE)
ANDREWY KONOPLYANIK, ADVISOR TO GAZPROM EXPORT LLC: In two weeks, the first tranche of International Monetary Fund money will come to Ukraine. Russia is the country that has this huge indebtedness that Ukraine has such a debt for Russian supplies, is expecting as a creditor of the first order that some of this money will be used for paying for these previous deliveries.
And then it will be clear whether Ukraine will be ready at least step by step, slowly and steadily, to diminish this indebtedness. At least to pay maybe in portions of this debt, it's most possible to pay it immediately. And then it is possible, maybe, to reorganize the servicing of this debt, but in the form of soft negotiations, the intention need to be represented by Ukraine, by my Ukraine colleagues.
QUEST: Right. Do you think that energy is being used as a diplomatic and political tool by Russia in this case?
KONOPLYANIK: As an economic person, I consider that if the two sovereign states, two independent states, have commercial relations between them, the best thing to base it on that market-based prices. Unfortunately, their move to market-based pricing from political pricing that existed before 2006 in relations between our countries means for a great increase in the level of the price.
That was interpreted by a big number of politicians, journalists, even economists as a politically-motivated action. My view is quite different.
That was a coincidence that we have developed our -- that we have signed our contract in early 2009, which means that the reference period for this contract was 2008 with the highest -- historically highest level of oil prices. That means that the level of gas prices which were linked to the value of the oil price --
QUEST: Right, yes --
KONOPLYANIK: -- were so high, which definitely creates the disappointment for our Ukrainian friends.
QUEST: Are you worried that investors are losing confidence in the Russian economy at the moment?
KONOPLYANIK: Yes. I am worried. And I am worried based on the following. I do realize that we are sometimes living not in the world of facts, but in the world of perceptions. And investors, those people, those market participants who are most nervous because they definitely would like to have a lot of guarantees that their money will be paid back.
And all the turbulence that is created, as if Russia is not a reliable supplier, as if the economy of my country will go down, and all these other, let me say, perceptions that definitely create nervousness for investors, and they would not like to put on high risk their money that they would like to invest in my country.
(END VIDEOTAPE)
QUEST: That's Professor Andrey Konoplyanik. You've heard both points of view on the question of Ukraine. As we continue our nightly conversation on business and economics, it's got the site that everyone's talking. China's answer to Twitter takes on the NASDAQ.
(COMMERCIAL BREAK)
QUEST: One of China's most popular websites has made its stock market debut in the United States. Weibo is considered the Chinese answer to Twitter.
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(BEGIN VIDEO CLIP)
(CROWDS CHEER)
(OPENING BELL OF NASDAQ RINGING)
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QUEST: Ooh, a lot of noise and fuss. This was the opening scene -- or the scene at the opening bell of the NASDAQ. Weibo claims to have 130 million active users, something that's particularly significant in a country where there are strict censorship laws.
And this is the Weibo stock price as it went through the day. It finished up 21.7, which is good news, given that the actual results of the company haven't been that inspiring. It lost nearly $48 billion in the first quarter. I wonder if that's $48 million? Might be a typographical error in that. Anyway, almost double its losses in the same period last year.
For some, Weibo's IPO was a warm-up act for a debut of Ali Baba, considered the equivalent of both Amazon and eBay combined. Our correspondent from Beijing is David McKenzie, who is visiting us, and we are, true to form, taking the opportunity to make sure we squeeze every last bit out of these people. So, David, good to see you, sir.
DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT: Good to see you, Richard.
QUEST: Weibo -- the significance of Weibo is what these days?
MCKENZIE: The significance of Weibo is the huge amount of users that are on the site and the way that it distributes information in a tightly- controlled environment. So, with more than 130 active -- million active users, that is in itself a powerful tool in China for people to talk. But increasingly, they're afraid to say too much.
QUEST: Because of censorship, because of repercussions? If they're doing that, where are they going instead?
MCKENZIE: Well, they're going all sorts of places, but to speak to your first point, yes, there is censorship in China. Weibo, when it put its filing here in the US said to the SEC that censorship could have a material impact on their business.
What it could mean is people moving away from Weibo. There is a possibility if someone puts something up that is controversial, that is seen as kind of the equivalent of internet trolling, they can end up in prison in China. So, that's a cooling factor on the company and their interaction with it.
QUEST: When you talk about the -- which other services are available? The Twitters of this world, are they blocked? When you are in Beijing, are you able to access these services?
MCKENZIE: You're not able to access them on the regular internet. Facebook, Twitter, it's all been blocked for several years. You would have to use a VPN, effectively mirroring --
QUEST: Right.
MCKENZIE: -- a computer in New York or in London to get into these sites. So, that has helped companies like Weibo gain followers in China because they can get in and access it.
QUEST: But how much is the Weibo of this world -- how much is Weibo the acceptable face of dissent that the party allows in the sense that it knows it has to have some escape valve. Like any pressure cooker, you need to let some of the steam out. And if people want to rant and rave a bit on Weibo, well that's better than having them on the streets rioting.
MCKENZIE: Well, that's a very good point, Richard. And yes, on some level, it acts as a way for pressure, anger to escape. But I think what we've seen in the past year is a tightening of the screws on Weibo. People aren't talking as much and as openly.
Partly there's more censorship than I saw when I first arrived in Beijing just over a year ago. And partly it's because there are new laws that have been put in place to stop people from spreading rumors. So, there are other sites, like WeChat, where it's more a private setting that people are flocking to as well.
QUEST: I want to change direction completely here. Malaysia 370, because of course you've been covering the Beijing side of that story. And I want to take the opportunity of you being here just to get some perspective.
How far has the criticisms of the Chinese that we have read in, for example, "The New York Times" article, for the way they handled the satellite pictures, the way they handled the pings, how far has that been reflected in domestic -- if at all -- domestic Chinese media?
MCKENZIE: Well, there has been some recent coverage in the state media criticizing in general the search effort, not necessarily criticizing the way the information has been put out.
When they put out the satellite images that we talked about and also the picking up of the audio pings that turned out to be discredited, it was embarrassing, it is embarrassing for the Chinese government. So, people privately are talking about that, but they haven't allowed that percolate out into the state media.
QUEST: All right. When are you going back? Shouldn't you be on your way back already? Haven't you got duties to attend to?
MCKENZIE: Always working, Richard. Thank you.
QUEST: Good to see you, sir. Thank you very much, indeed. Now --
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QUEST: -- it is the last trading day before the long Easter weekend. It's wrapped up with the NASDAQ and the S&P 500 rising. The Dow -- look at the Dow. It was down a bit, up a bit, down a bit, up a bit, up a lot, then down just a little tad, off 16 points, 16,408, virtually unchanged.
Europe's main markets ended the day higher. Barclay shares rose after the firm said it would outline its growth strategy. There was some concern earlier about stocks in big drinks companies. Diageo fell 4 percent.
In Paris, Remy Cointreau's stocks were down by more than 3 percent. It's a crackdown in Beijing on extravagant spending by officials in China, injuring a huge market for many of the drinks companies. I could arguably say maybe some expenses of correspondents are being looked at a little more closely.
Coming up after the break, an automobile extravaganza. We'll be live at the New York Auto Show with the president of Audi America. See which car has been taken Paula Newton's fancy after the break.
(COMMERCIAL BREAK)
QUEST: Now some breaking news, some sad breaking news to bring to you this evening. The Nobel prize-winning author Gabriel Garcia Marquez has died. He was an 87-year-old Colombian. He'd been recovering at his Mexico City home since April the 8th. He had been hospitalized for nine days for infections in the lung and the urinary tract.
Gabriel Garcia Marquez is considered one of the greatest writers of his time. His novels include "Love in the Time of Cholera" and "A Hundred Years of Solitude." We will obviously have more details and more tributes in the hours ahead as we continue and get more details.
Audi has turned to celebrity faces to get its name across in the United States. Paula Newton is at the New York Auto Show and has the president of Audi America with her this evening.
PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: Hello there, Richard. Well, Ricky Gervais is the face of this campaign here in the United States, and I want to ask Scott Keogh -- thanks so much for joining us, you're the head Audi here --
SCOTT KEOGH, PRESIDENT, AUDIO OF AMERICA: Absolutely pleasure, thank you.
NEWTON: -- in the United States, but I wanted to ask you, let me get this straight, you're using a British comedian to peddle a German car in America. What would possess you to think that was a good marketing campaign?
(LAUGHTER)
KEOGH: First, it's a brilliant campaign, and that's exactly what Audi does.
(LAUGHTER)
NEWTON: OK.
KEOGH: If you look at the campaign, it's really about being uncompromised, and whether it's Ricky Gervais, who opens the spot, Claressa Shields, the woman boxer, or David Chang the chef, it's always people who are uncompromising, and frankly, that's exactly what Audi is.
We don't cut corners, we don't nickle and dime, we do things right. And it's a great spirit. And more importantly, it's been a great social campaign. It's really activated the company and the car.
NEWTON: In terms of your campaign here in America, a tough sell at times in terms of that German company, seen as a bit of an expensive vehicle. What have you done to try and get out of that image?
KEOGH: It's a simple thing for us. If you look at our image, it's really not this ostentatious, old-school luxury. People view us as a high technology brand, a high design brand, and they do see the value in Audi. If you look at total cost of ownership and those things, people say Audi, that's the smart play. It's well-built, high quality, it lasts long. So, it works for us.
NEWTON: And you've been able to turn American heads with it?
KEOGH: We have. And look, the truth of the matter is this: it took us 40 years to sell 100,000 cars in America. It's taken us another three years to sell 150,000 cars. We've been breaking records each and every year. This month will be our 40th consecutive record sales month.
NEWTON: And I'm sure you want to show off the vehicle behind me. It's just one world car of the year. It's the A3?
KEOGH: This is the A3, exactly right. It's -- it launched on the market on April 3rd, very appropriate for the A3.
NEWTON: And tell me why it's not dirty diesel. Because this is diesel, is it not? It comes in a version of diesel.
KEOGH: This car is a TDI, exactly right. And look, I think these myths of diesel are exactly that, they're myths from the 1980s, diesel vibrates, diesel is dirty, that is not the case at all. And if you look at this vehicle, and you start to look at what happens in Europe, TDI is an extremely smart solution.
It's more fuel-efficient and gives you dramatically more range. The car has more torque and it drives better. And we find with Audi, it's becoming more and more successful even here in America, which is great.
NEWTON: This is a tough segment of the market. It's in the sedan. Why do you think this car sets you apart in this segment?
KEOGH: What sets us apart is, I think, no one has been able to deliver a proper luxury car at $30,000. As I said before, there's always compromise after compromise. If you look at this machine, first and foremost from the ground up, it's well-built. Fit, finish, seems, safety crash rating, five-star plus.
The other thing beyond that is the technology. This is the only car in the market, period, even in $80,000 cars, that has 4G LTE in the car. So, you've got massive speeds, all of that technology. And it's an Audi, to top all things off, which is right there.
NEWTON: Scott, you're making it sound a little bit too good to be true.
KEOGH: It is.
NEWTON: I want to as you a little bit about --
(LAUGHTER)
NEWTON: -- the recall situation that we've had. We've had Toyota, we've had GM in those kinds of scandals. What are -- what is your takeaway from how you see how that has been handled, when it's really shaken customers, and I have to say, shaken customers not just of those brands --
KEOGH: Yes.
NEWTON: -- but of spending this much money on a car?
KEOGH: Look, I have zero commentary on General Motors. What I can tell you about Audi, we've been at this for over 100 years. And it's a very simple thing: when something goes awry, you fix it and do it right. And that's exactly what Audi does. That's why we sell 1.5 million cars a year, and that's why we always do the right thing. And look, if you look at our history, we do do that.
NEWTON: We will be holding you to that, Scott. Thanks so much for joining us.
KEOGH: Thank you very much.
NEWTON: And Richard, I want to correct something. You wanted to know a car that took my fancy. Cars do not take my fancy, Richard. They're depreciating assets. That is your profitable moment. It gets you from A to B.
QUEST: You mean you don't sort of get all excited at something fast and furious?
NEWTON: No, no, no, no, no. No, no, no.
QUEST: All right. As soon as you get back home, I want to --
NEWTON: Not I.
QUEST: -- I want to see the picture of your old jalopy that you drive. I suspect it's probably rust-ridden.
NEWTON: I've got it right now. It's in the driveway. I can show it to you, Richard, coming up.
QUEST: Paula Newton, who is not a fast woman when it comes to automobiles, but she does like a small port and sherry at other times of the day.
When we come back after the break, the chief executive of Naftogaz responds to tough talk from Moscow.
(BEGIN VIDEO CLIP)
KOBOLEV: We hope there will be no fight, but if there is a fight, then we're up to it.
(END VIDEO CLIP)
QUEST: More of our exclusive interview with Andriy Kobolev just ahead.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment. This is CNN, and on this network, the news always comes first.
The Nobel prize-winning author Gabriel Garcia Marquez has died. The 87-year-old Colombian had been recovering at his Mexico City home following urinary tract and lung infections. He's considered one of the greatest writers of his time, with novels including "Love in the Time of Cholera" and "One Hundred Years of Solitude."
The chief exec of Ukraine's state energy company says he's willing to explore the possibility of buying gas from Europe instead of Russia. Speaking to me on QUEST MEANS BUSINESS, Naftogaz chief exec said while he hoped there would be no conflict between Russian and Ukraine energy companies, he's up to the fight if there is.
(BEGIN VIDEO CLIP)
KOBOLEV: The more they squeeze Ukraine, then the situation is getting worse for Russian gas supplies in Ukraine in the mid and long term. Because I'm absolutely sure we'll find a solution, but if we find a solution which is not Russian gas, that is very likely will lead to the situation when Ukraine will not be buying Russian gas for quite a long period of time.
And losing such a high market -- such a huge market, sorry -- I'm absolutely sure it's not something that Gazprom would prefer to do.
(END VIDEO CLIP)
QUEST: Diplomats meeting in Geneva have reached an agreement aimed at de-escalating the crisis in eastern Ukraine. The agreement calls on armed groups in the country to be disbanded, all illegally-seized buildings to be returned to their owners, and offers an amnesty for pro-Russian separatists. We'll talk more about this after this short summary.
Divers in South Korea are desperately trying to get inside a capsized ferry, hoping that air pockets are keeping at least some of the 276 missing passengers alive. Rain, high winds, and thick fog have hampered the search. The confirmed death toll now stands at 20. Most of those onboard were high school students on a field trip.
The salsa legend Cheo Feliciano has been killed in a car crash. He was 78 years old. Feliciano lost control of the Jaguar car he was driving in the early hours of Thursday morning in Puerto Rico. The governor there has declared three days of mourning for the singer.
Returning to the crisis in Ukraine, two developments of note today. Firstly of course the agreement in Geneva I just told you about aimed at de-escalating the tensions. And secondly, President Putin's word that he'll switch off the gas that we heard about earlier. Fred Pleitgen is live for us in Kiev. What will they make of this agreement, this Geneva deal?
FREDERIK PLEITGEN, BERLIN CORRESPONDENT FOR CNN: Well you know it's interesting because I spoke to the acting prime minister of this country, Richard, and he said that going into these negotiations for his delegation he felt that they had no chance at all. And so he said he was actually pleasantly surprised that at least there was some sort of at least preliminary agreement that was reached. Now of course in all of these things he said, he doesn't trust at this point in time. He says he wants to see some real action on the ground before he actually trusts all of this. I want you to listen in to one segment of what he had to say during the interview that I did with him earlier today.
(BEGIN VIDEOCLIP)
ARSENIY YATSENYUK, UKRAINIAN PRIME MINISTER: It's not even a step, sir - the first declaration to make the step. Will they have any trust to Russians? No. But as they go public, we urge them to undertake real steps - to pull back their security forces, to pull back their - the -- CSB agents, to stop to finance these terrorist organizations that are deploiting (ph) southern and eastern Ukraine and to do everything they can to de-escalate the situation.
(END VIDEOCLIP)
PLEITGEN: So there you hear it, Richard. On the one hand, he had some very strong language. He called those people who were occupying those buildings in eastern Ukraine terrorists, which of course makes the negotiating room with them very, very small. But on the other hand, he did say that there are steps that need to be taken to de-escalate the situation. And he also said that he would negotiate even with the people who are holding these buildings. And one of the really interesting things that he said, Richard, is that he felt that the government here in Kiev also needs to do more to meet the needs of the people in eastern Ukraine and also of course to dispel their fears after the takeover that happened here in Kiev about a month and a half ago, Richard.
QUEST: Doesn't he still have the problems you were hearing though from the Naftogaz chief exec earlier in the program? The core issue of gas, of energy, of keeping those lights on behind you and keeping the houses warm even though spring is on the way - that is a real problem for the prime minister.
PLEITGEN: Yes, I mean they're a huge problem for the prime minister, there's absolutely no doubt whatsoever. One of the things he already has working for him at this point in time is that at least the Europeans appear to be onboard with him. There's that first delivery of German gas that apparently has happened over the past couple of days, might have even been today. So at the least the problem is not as pressing as it was a couple of days ago. But of course it is something that really - it's an issue, and it's an issue on two fronts. On the one hand of course, as you say, keeping the lights on behind me is something that's very, very important. But also it could seriously undermine the credibility of this interim government if people have to start paying more for gas which they almost certainly will because a lot of the subsidies are going to go away but also because the price of gas has just massively increased as the CEO Naftogaz said in the interview with you. And that could undermine the credibility of this very fledging government in a situation where this country is already on its toes, where you already have people in the east who are unhappy anyway. So certainly yes, gas is a major, major concern -
QUEST: Right.
PLEITGEN: -- for this interim government at this point - absolutely no doubt whatsoever and the interim - the acting - prime minister said no less, Richard.
QUEST: Frederik Pleitgen in Kiev for us this evening. Thank you, Freddy (ph), good to see you. Now to follow on from that with our exclusive with the chief exec of Naftogaz, let's develop the thought a little bit more. Fred was talking there about the subsidies given by the Ukrainian government to keep the price of gas cheap, subsidies which are now on their way out. Russia is raising the price, it means a huge budget deficit issue and I asked the chief exec Andriy Kobolev how he will teach Ukrainians that they must pay more for gas.
(BEGIN VIDEOCLIP)
KOBOLEV: As there is a long way forward for us, the most sensitive segment of customers is definitely households. We've started increasing prices there, and we believe there is mechanism which will help us find compromise between the rich and poor. So, by - we do not need to sell gas at low prices for people who cannot afford that - who can afford this, and we have to provide subsidies for those you can't.
QUEST: Your company - you're right at the heart of this entire geopolitical battle between Ukraine, the EU, Russia and energy, Gazprom. Your company Naftogaz, you are if you like, the kicking boy, aren't you?
KOBOLEV: I guess Naftogaz was alzen (ph) - was always in the middle of the fight, so everyone there is used to it, so we are OK with that.
QUEST: And you, sir, are you up to the fight against Gazprom and Russia?
KOBOLEV: We are up to everything to protect our interests -- of Naftogaz initial interests. We hope there will be no fight, but if there is a fight, then we are up to it.
QUEST: Did you ever expect to be the chief executive of the company in such difficult circumstances, where, frankly, whichever route you take, it's going to annoy somebody, anger somebody else and make difficulties for other people. It's not easy, is it?
KOBOLEV: It's not easy but it's interesting, it's challenging and I think it's absolutely doable.
QUEST: So, sir, when you get back to your office tonight and tomorrow, what's the first thing now that you need to do to ensure the lights stay on, the bills get paid, and you keep your job?
KOBOLEV: I need to check the gas balance and see how gas flows from Russia.
(END VIDEOCLIP)
QUEST: That was nice to know the chief exec's got his finger on the pulse. Check the gas balance along with the bank balance no doubt too. The German software firm SAP says the crisis in Crimea has created uncertainties in their words, and its market in the former Soviet Union. SAP reported a sales increase of 2.47 percent in the first quarter, missing expectations. Jim Boulden asked SAP's chief exec or co-CEO Bill McDermott how much recent events have affected the business.
(BEGIN VIDEOCLIP)
BILL MCDERMOTT, CO-CEO OF SAP: I think the most important thing is we have a 1,000 employees there, we also have about 2,000 customers. So this is a very important theater of operation for SAP. So, aside from the revenue aspect of it, we wish for this situation to deescalate, get peaceful and get this very important market back into the global economy, executing as planned. Having said that, yes, this market has been growing very fast for SAP, and in the first quarter it did not, it actually stagnated because decisions are postponed until the crisis is over. The good thing is those decisions don't go away. The bad thing is you got to wait. Having said that, I think this is another thing for the investor. You know, when you are a large global company operating in, you know, 130 + countries in all the industries of the world, you can deal with these setbacks in any one given geography or industry or market segment and still have a good quarter which we did.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: So what specifically can SAP do to ensure the safety of their employees? You said there's a 1,000 in the region.
MCDERMOTT: Well, first of all, our employees are all safe and that's a good thing, and I think right now the situation is quite peaceful as we've checked in on people and we know exactly what's going on on the ground. Right now I think the big issue of the day is everybody's talking at the table - at a round table - from the E.U. and the U.S. and Ukraine and Russia, and hopefully a very peaceful, thoughtful win-win solution will be brought to bear and everybody can get back to work and get back to, you know, participating in this exciting global economy.
(END VIDEOCLIP)
QUEST: That's the co-CEO of SAP. Still ahead, to American icons come together. We'll show you the Mustang and the Empire State Building - how did one get on top of the other. Interesting thought - after the break.
(COMMERCIAL BREAK)
QUEST: So, the New York Auto Show is well and truly underway and we have our own little auto show here. We've already introduced you to the Audi. Now let's talk about this American icon, the Mustang. The Mustang is celebrating its 50th birthday at the Auto Show. The Ford executive chairman Bill Ford says the company is certainly not resting on its laurels and will continue to update its brand. He spoke to CNN a little earlier.
(BEGIN VIDEOCLIP)
BILL FORD, EXECUTIVE CHAIRMAN, FORD MOTOR COMPANY: There's a lot of new stuff on the Mustang itself and so we're taking it globally now. We're taking it to Europe, we're taking it to China and, you know, to me, you don't discard something that is such an incredibly strong brand. I mean, people love Mustangs all around the world. I'm leaving here to go to Charlotte Motor Speedway where there are going to be 40,000 Mustang enthusiasts lined up, and so you know I think the trick for us is to continue to innovate on a brand that's been around for 50 years, and we've done that in this car.
(END VIDEOCLIP)
QUEST: Now, when it comes to iconic motor brands, the Mustang is certainly up there - that much is true. And it was literally up there when Bill Ford - well that's the Empire State Building. It's a live picture of the Empire State Building. You can't quite see at the moment, but take it from me, that up there somewhere there is one of these nestling on the Empire State, and indeed as the picture shows, Bill Ford posed with the Mustang on the top of the Empire State Building. If you want to know how did they get that up there in a stunt to make it so you could have two icons together, there's only one person who will explain it. CNN's Jeanne Moos.
(BEGIN VIDEOCLIP)
JEANNE MOOS, CNN NATIONAL NEWS CORRESPONDENT BASED IN NEW YORK: Down there on the street is where cars are supposed to be, not up here, 86 floors above New City atop the Empire State Building. The out-of-place 2015 Ford Mustang had tourists wondering.
Male 1: The first thing was how in the name of God they get up here?
Male 2: Maybe by helicopter.
Male 3: Helicopter or something.
Male 4: I thought it (inaudible) by helicopter.
Female 1: Basically rode the elevator just like you and I did.
MOOS: Not just like you or I. We would have to get chopped up into pieces. The Mustang was cut up into five pieces small enough to fit in the smallest Empire State Building elevator.
Male 5: We only have an elevator that's 36 inches wide.
MOOS: He actually built a mock elevator back at the Ford shop to make sure everything would fit. This wasn't the first time a Ford Mustang rode these elevators. Back in 1965, the then newly-introduced Mustang made the same trip and was photographed on the observatory. This latest elevation of the Mustang was meant to celebrate its 50th anniversary. The weather, though, didn't cooperate. Snowflakes were flying as they assembled the Mustang high above Manhattan. It had to be done overnight when the observation deck was closed and the car had to be put together in a six- hour window. Here's the process sped up. Despite the weather, they met their deadline. Ford wasn't actually first to raise a car to new heights. Maybe they got the idea from Chevy.
Male Announcer: Chevrolet for 1964.
MOOS: They did use a helicopter to lift car and model atop this sandstone tower in Utah.
Male Announcer: Chevrolet stands alone.
MOOS: No windy conditions prevented the chopper from retrieving them on time and the model had to huddle in the Chevy for a few extra hours. Ford's executive chairman wasn't exactly huddling at the wheel atop the Empire State, but don't expect him to drive off -
Female 2: Can you drive it around here?
Female 3: If we put an engine, you can drive it around here.
MOOS: The Chevy didn't have an engine either. It would take a herd of wild Mustangs to pull this car. The motor that mattered here was the one running the elevators. Jeanne Moos, CNN New York.
(END VIDEOCLIP)
QUEST: Wonderful. Now since we're doing a bit of this and a bit of that, how about a bit of the other? Chelsea Clinton, the daughter of the former U.S. President Bill Clinton and the Secretary of State - former Secretary of State Hillary, has announced that she's expecting. She shared the news a short time ago while on stage with her mother in New York. The baby's due later in the year. It's the first child for Chelsea and her husband Marc Mezvinsky. The couple were married in 2010. There's still no word, of course, whether she's going to be going for a career in politics like her parents. The weather forecast now. Jenny Harrison at the World Weather Center. Good morning, ma'am - afternoon.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Morning, yes, afternoon, evening.
QUEST: Well, I've been all over the place now and I'm a bit overcome with emotion.
HARRISON: (LAUGHTER).
QUEST: Overcome with emotion.
HARRISON: You are, you are. Yes - weather. Let me get straight to it because of course we're heading into the Easter weekend which for so many is a very, very big weekend, a holiday of course 'round many parts of the world. And what you'll see straightaway in Europe is a rather unsettled picture. We've got sort of a slither here of good, clear skies which actually been squeezed , the two systems coming in one from the southeast and one from the north. The winds are not too bad. The strongest winds staying well across into northern Scandinavia, but you will notice at the end of this forecast as we head Saturday into Sunday, the winds coming in again from a slightly different direction, and this is why. We have this area of low pressure, high pressure to the north and the northwest. A little bit cool and chilly across the northeast of Europe, but all of this gets pushed up towards the north and the east, and then this rain comes in an really does impact quite a lot of central and southern Europe. So, that is on the (cause). The temperature is also a little bit cooler, but not bad really. Overall temperatures pretty close to the average for this time of year. And of course it has been fairly mild. So, what has the weather got in store this Easter weekend in the Vatican? Well, you can see that certainly on Saturday that looks to be a rather wet, cloudy day - quite dull. But in fact Friday - Good Friday - and on Easter Sunday itself we've got some very nice weather conditions - 21 Celsius. That of course is 70 degrees Fahrenheit, so pretty good. And also fairly close to the average for this time of year. Elsewhere, temperatures a little bit above certainly in Warsaw, 22 on Saturday. Look at that. The average is actually 13 here. That comes with good sunshine throughout the weekend. Same in Berlin, it'll be nice and mild, some good sunshine. Not quite as good in Bucharest. Temperatures pretty good, but quite a bit of cloud with some rain in your forecast. Now, it is that time of year, the tulips are just prolific of course. You would think this was Amsterdam, well you'd be forgiven for being wrong because it's actually Germany. Of course these huge fields here all grown and all these cultivated flowers across the Sentel (ph) Square. So weather is a go for your Easter weekend. Why don't you head to Amsterdam Saturday and Sunday - very nice. Partly cloudy skies, good temperatures, 19 Celsius on Sunday. Not bad in the overnight hours, certainly not that cold. You saw the bicycles there - certainly good weather being on a bike in Amsterdam. And then finally, let's end in Mallorca in Spain because if you want a little bit of heat this early in the year, 24 Celsius on Saturday, 21 on Sunday and good, clear sunny skies. So, there you go. A couple of ideas for your Easter weekend, Richard.
QUEST: Oh, I could do with a bit of that. Thank you very much Jenny Harrison at the World Weather Center. Either Amsterdam or Mallorca. Now, when we come back after the break, as we told you and reported earlier in the program, the world says goodbye to one of its greatest novelist. More on the death of Gabriel Garcia Marquez after the break.
(COMMERCIAL BREAK)
QUEST: And so we should take a moment to return to some news we mentioned earlier in the program. The Nobel Prize-winning author Gabriel Garcia Marquez has died. The 87-year-old Colombian had been in poor health for some time. Marquez is considered to be one of the greatest writers of his time. CNN's Rafael Romo now brings us the story of his remarkable life and career.
(BEGIN VIDEOCLIP) RAFAEL ROMO, SENIOR LATIN AMERICAN AFFAIRS EDITOR OF CNN WORLDWIDE: By the time Gabriel Garcia Marquez won the Nobel Prize in Literature in 1982, he was already an internationally-acclaimed writer. The Colombian author's works had already been published in multiple languages. Garcia Marquez, affectionately known as Gabo, would later tell adoring audiences that he always wanted to be a writer.
GABRIEL GARCIA MARQUEZ, WRITER, VIA TRANSLATOR: I knew that I was going to be a writer. I wanted to be a writer. I had the will, the disposition, the energy, the ability to be a writer. I was always writing. I never thought about being something else. But I never knew that I could make a living with it.
ROMO: His novel, "One Hundred Years of Solitude" which was published in 1967, made him a literary star. It sold more than 30 million copies throughout the world during the writer's lifetime. He put a spotlight on the Latin American genre known as magical realism in which reality and fiction class, making it difficult for the reader to tell where one ends and the other begins. Garcia Marquez's association was highly valued by world leaders from Yasser Arafat to Mikhail Gorbachev whom Gabo met during the latter years of the Cold War. He had a special bond with Cuba's Fidel Castro and the Cuban people, often visiting the island and appearing in public with this Communist leader. Also a screenwriter in 1986, he founded an international film school in Cuba with Castro's full support.
GARCIA MARQUEZ, VIA TRANSLATOR: It happened that with film I realized that making a movie was infinitely more difficult that I thought.
ROMO: He continued to write and lecture in Mexico where he lived for more than three decades.
GARCIA MARQUEZ, VIA TRANSLATOR: You shouldn't expect anything from the 21st century -
ROMO: -- he once told a group of young admirers. It is the 21st century which is expecting it all from you. With his health failing, he slowed down during the mid-2000s but still attended events like the International Book Fair in Guadalajara in 2008. On March 6, 2014, Garcia Marquez walked out of his house to briefly meet with fans wishing him a happy 87th birthday. He was all smiles and seemed in good spirits but made no comments. Garcia Marquez's legacy is perhaps best captured by the Nobel Prize Committee, writing about the author in 1982 a text that talks about the writer as a creator and one of the most-accomplished storytellers ever. With his stories, Gabriel Garcia Marquez has created a world of his own which is a microcosm as the committee said. In its tumultuous, bewildering yet graphically convincing authenticity, it reflects a continent in its human riches in poverty. Rafael Romo, CNN Atlanta.
(END VIDEOCLIP)
QUEST: Gabriel Garcia Marquez who died today.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." We were pleased and privileged tonight to bring you an exclusive interview with the CEO of Naftogaz, Mr. Kobolev. Interestingly, there is a man with a very difficult job. Whichever way he does it, he's going to annoy somebody. After all, he's got to keep the gas on and he's got to keep the pipeline full and he's got to keep the home fires burning. And that means of course he has to raise the prices for people in Ukraine because subsidies are going to be gut. And if he doesn't manage to annoy the people who are his customers, then he stands to annoy the Russians because they want to put up (ph) the price. So, he has to get the gas from Europe which won't be easy because there might not be that much gas about. Which is why it's impressive that this 35-year-old man who's only been CEO for month, quite happily says he's up to the job. And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RING BELL) I hope it's profitable. I'll see you tomorrow.
END
