Russian gas cuts - why there is no need to worry

Jerome,
I've been lurking at DailyKos for the past 1.5 years and never posted a comment there.  I've been lurking here at Eurotrib since its inception as well.  This diary, however, has finally forced me to post a response ...

According to your point of view, Putin is trying to punish Ukraine for leaning closer to the West.  Specifically, you seem to be saying that he is retaliating in response to the Orange "revolution" - which was an American-sponsored coup, by the way, which has done nothing but harm the Ukrainian economy and people.  We can put this aside, however, because it has nothing to do with the current "crisis".

The real reason for Putin demanding that Ukraine pay market price for Russia's natural gas is that the Russian people are sick and tired of subsidizing countries that continually bad-mouth her in public, yet are more than happy to buy her gas for $50/ 1000 cm and resell it to Hungary, Romania, and Moldavia for $250.  Why should Russia subsidize Ukrainian industries and companies, like steel maker Kryvorizhstal, that are in direct competition with Russian industry?

[Minor edits and links added - Oui]

BBC News June 14, 2004 -- A company owned by the son-in-law of Ukraine's President Leonid Kuchma has won a tender to buy Kryvorizhstal, the country's biggest steel plant. Viktor Pinchuk, who has interests in steel, energy and media, won the bid in partnership with Rinat Akhmetov, Ukraine's richest man. Their 4.3bn-hryvnia (£430m; $780m) bid won despite competition from Russian, US and European steel firms. The tender has aroused vigorous protest in Ukraine and abroad.

● Analysis of Orange Revolt

Gazprom to Cover European Exports 'Stolen by Ukraine'
Gazprom Deputy Chief Executive Alexander Medvedev said at the press conference: "... gas supplies to Europe will be restored in full, in accordance to their contract. However, the situation in which Ukraine continues to steal gas and we continue to supply European customers can't continue indefinitely."

Turkmen Gas

Gazprom will buy 30 billion m³ of Turkmen gas this year, including 15 billion m³ in the first quarter, which means there is no room for Ukrainian gas in Turkmenistan's pipelines, the company said in an e-mailed statement yesterday.

Turkmen President Saparmurat Niyazov confirmed his country will sell Ukraine 40 billion m³ this year, according to a statement on Ukrainian President Viktor Yushchenko's Web site, following a telephone conversation between the leaders.

  «« click on pic to enlarge

● BBC Video Report - Deputy Chairman of Gazprom
● WTO official Pascal Lami --
Russia and Ukraine should pay market prices

European press today

Tomorrow, a meeting has been set for the EU Energy Commission with all EU officials. Representatives from Russia, Ukraine and Gazprom will also attend the meeting.

European Commission Press Info

The European Union is pursuing a carefully neutral line in the spat over gas prices between Russia and Ukraine, refusing to blame either party. An emergency meeting of energy officials is set for 4 January, but the EU insists there is no supply crisis.

Brussels (RFE/RL) Jan. 3 -- The Russian-Ukrainian crisis has brought several responses from the European Union.

The European Commission today urged Russia and Ukraine to return to the negotatiating table in their dispute over gas prices. This came just hours before Russian and Ukrainian gas officials were reportedly due to meet later in the day to discuss their pricing dispute, which led Moscow to cut gas supplies to Ukraine.

Also in response to the crisis, the European Commission has called an emergency meeting of EU energy experts and industry representatives in Brussels on 4 January to assess the impact of the spat.

Russia's attempt on 1 January to cut gas deliveries to Ukraine led to considerable drops in gas supplies across Europe that depend on the same pipelines. Although it accuses Ukraine of siphoning off gas, Russia has now restored gas levels in Ukrainian pipelines to nearly precrisis levels.

European Commission spokesman Johannes Laitenberger said further talks between Moscow and Kyiv are the best way of overcoming the crisis. "At this point in time the commission urges the parties to the dispute to get back to the table of negotiations," he said. "The best possible solution would of course be for the parties to the dispute to solve the conflict between themselves. If that proved not to be possible, nothing is ruled out, nothing is ruled in [in terms of EU reaction]."  

MOSCOW (Reuters) - Russia and Ukraine reached a face-saving deal on Wednesday in a bitter gas dispute which hit supplies to Europe for two days and cast doubt on Moscow's reliability as a secure supply source.

"We have reached a final agreement," Gazprom Chief Executive Alexei Miller told a news conference in Moscow after crisis talks with Ukrainian officials.

"This agreement will ensure stable supplies to Europe."

Details were sketchy, but Miller said the five-year deal was effective from January 1 and based on a price of $230 per 1,000 cubic meters of gas. That is a huge rise from the $50 Ukraine had been paying -- a holdover from subsidized Soviet-era prices.

But the head of Ukraine's Naftogaz state energy firm, Oleksiy Ivchenko, told the same news conference that -- after mixing in supplies from Turkmenistan and Kazakhstan -- Kiev would actually pay $95 per 1,000 cubic meters at its border.

Analysis - read on ...

Gazprom Cuts Gas Supplies to Ukraine ¶
Hungary-Poland Gas Disrupted ¶ Pipeline & Ecology
Fri Dec 30th, 2005 at 08:00:14 AM PST