EDITORIAL: Gas War in Ukraine

EDITORIAL

Gas War in Ukraine

Late last week two disturbingly related stories moved on the worldwide news wires.

On Thursday, the Russian gas monopoly Gazprom cut off gas supplies to Ukraine when it demanded a price rise to $250/1,000 cubic meters and Ukraine offered only $200.  Gazprom also wants to collect half a billion dollars in fines for late payment.

On Friday, crude oil prices jumped nearly 4% to just over $46/barrel.  Traders worried that decreases in gas flow to Ukraine could undermine the flow of gas to Europe, creating scarcities.

Why, it was almost as if Russia wanted to disturb the gas market and drive up prices artificially due to a panic.  Why would it want to do an outrageous thing like that, bordering on terrorism?  For one thing, as it is now the Kremlin has frittered away half its cash reserves defending the ruble and the stock market from plummting world oil prices.  As the Wall Street Journal has reported:  “Natural gas prices tend to follow oil prices with a six- to nine-month lag: With crude down more than $100 since reaching a record high of $147 a barrel in July, gas prices are expected to fall steeply next year.” So another big shock is in Russia’s future, and it needs to scrape together all the cash it can in hopes of avoiding bankruptcy.

And if a few million people in Urkaine have to freeze, so be it.  Careful though, Russia. One day soon you may yourself be standing in Ukraine’s felt boots and asking the West for help.  When that day comes, we will remember your behavior towards Ukraine.

It’s difficult to say, then, whether Russia cut off gas supplies to Ukraine because it wanted to bludgeon Ukraine back into a position of submission, forcing it out of NATO’s protective embrace, or because it wanted to panic the gas market in a desperate bid to keep the gas price up. Given the relentless devastation wrought by the plunging oil price, it’s not difficult to foresee a total Kremlin collapse if the price of gas were to follow suit.  As we previously reported, the drop in oil prices along has wrecked havoc with Gazrpom’s market capitalization; if gas prices did the same, Gazprom might simply cease to exist.

What is clear is that, citing an agreement Ukraine claims does not exist, Russia refuses to acknowledge Ukraine has the right to raise transit prices on gas Russia sends through Ukraine to its European markets even as Russia demands that Ukraine itself pay dramatically higher prices.  Russia doe snot care that gas prices are due to fall in the very near future, it wants to squeeze Ukraine for all it can before they do. This bespeaks desparation.

Equally clear is that Russia is jeoparizing Europe’s gas supplies, creating chaos in the markets.  This makes it clear that Russia is not above destabilizing financial markets in order to turn a quick profit, belying any Russian contention that it is a “stable partner” in the energy field and therefore deserving of, for instance, a seat at the G-8 table.

Russia is doing to Ukraine with natural gas what it did to Georgia with tanks.  Just as was the case with its barbaric invasion of Georgia, Russia is cutting off its nose to spite its face.  Europe is polarizing against Russia, especially Eastern Europe which is the first affected by reductions in pressure on the Ukrainian gas lines and the resulting inability of Ukraine to pass gas along to them.  As Ukrainians witness blatant Russian aggression little different from that practiced by the USSR, they are reminded of how horrible it would be to be absorbed by neo-Soviet Russia, and move closer to NATO, just as Georgia is doing.

And Russia is left alone, friendless in a cold cruel world.  Does Russia really imagine, as the USSR did, that it can pursue such a course of action indefinitely, with impunity?  Does it really think it can make friends and influence nations with threats and intimidation?  How can it, when it saw the USSR destroyed by such conduct?  Have Russians learned nothing from their own history? Do they even know it?

Russian willingness to provoke the outside world, and then to wail and complain about “foreign encirclement” when the world responds, is indicative of national psychosis.  Russia seems bent on repeating the same self-destructive cycle over and over again until it is ultimately destroyed.  If NATO were to behave towards Russia as Russia is now behaving towards Ukraine, Russia would call it an act of war.  But Russia has no problem acting in a unilateral manner towards smaller nations it feels it can dominate, even as it demands that larger, more powerful nations than itself treat it as an equal.

This is Russian hypocrisy laid bare. It destroyed the USSR, and it will do the same to Russia.

57 responses to “EDITORIAL: Gas War in Ukraine

  1. But the Ukraine may also be using this dispute to promote foreign policy goals. The Ukrainian government knows Russia is mindful of its image in the West, especially since last year’s war against Georgia, and wants to come off as a reliable energy supplier who won’t jeopardize European security in this respect. But by making Russia look like an energy bully and creator of tensions, as it has been in the past, one analyst believes the Ukraine is hoping to spoil Russia’s relations with European countries who can grant the Ukraine NATO membership and support it against an aggressive Russia.

    But few European countries, however, are likely to care about the two states’ hot public relations war if they are left to shiver in the cold.

    http://frontpagemagazine.com/Articles/Read.aspx?GUID=9B04AD95-F703-4010-A81C-A36A45D9BD35

  2. One thing that is eminently clear (again) is that Western Europe cares little about the fate of democracy in the former Soviet Block. Timothy Garton Ash nailed this lazy hypocrisy at the time of the Orange Revolution: I have to repost a link to the column – it sums up exactly why, short of having their own gas supplies cut, Germany, France, Italy, and much of the British left are so callous and dismissive towards countries and peoples they have a moral obligation to support…

    http://www.guardian.co.uk/world/2004/dec/02/ukraine.comment

  3. I have said so before in other threads and I shall say so again here: although I normally would not trust Putin and his lackeys any farther than I would be able to throw him, and that in general his foreign policy towards Ukraine has been appalling, I cannot fault him for wanting the same amount of money from Ukraine that it would get if it sold its gas to France or Germany. The only two exceptions arguments against Russia are 1) that the choice to rescind the $250 offer when the Ukrainians came close to reaching it at $235 indicates some bad faith in negotiating, and 2) the accusations of “siphoning” are in fact a result of necessary reductions in pressure to keep gas flowing to the rest of Europe.

    In the end, however, I expect that this problem will actually resolve itself. Right now, both Europe and Ukraine have gas surpluses that will last them until spring. In the meanwhile, two forces will encourage Russia to make a deal: firstly, the price of gas is probably going to crash due to the simple fact that it mirrors the oil market, and 2) as the loans to many of Russia’s oligarchs come due to their Western creditors, they will ask Putin to bail them out, and in order to do so, some cash for gas will look a lot better than no cash for no gas.

  4. The Russians are bullies. Period. Give us a break, Canada nor Mexico haven’t politicized their energy resources against the US because that’s not how democratic neighbors behave among themselves. Buying energy from the Russians as the EU does is like a pact with the devil who wants you destroyed ultimately. Russians aren’t neutral purveyors of energy.

    Can anyone find a period in Russian history where they haven’t bullied anyone that they feel they can? It’s what they do. Stephan Brown’s throwaway opinion at the end of the article is only that.

  5. “Have Russians learned nothing from their own history? Do they even it?” – No we know our history very well and so our government act so generously for Ukrainian people and so prudently to thieves Uoschenko&Co

  6. Scott – the question then would be, why does “Gazprom” (read “The Kremlin”) offer the despicable Lukashenko and Belorus a discount on top of a rate about 2/3rds of what the Ukraine was paying? I say, if Russia wants European market rates for its gas, it should pay market rates for its Black Sea base.

  7. Russia is hardly the first country to use its command of resources to get what it wants. Americans should consider themselves lucky that most of their foreign oil comes from Mexico and Canada – if anything, they are the exceptions that prove the rule. The word “Oil Shock” for example, should remind everyone how badly things can get, and if we don’t wise up and find some way off the juice, will get.

    That being said, I never understood why the Europeans didn’t wise up and build some LFO’s so that they can get their gas from somewhere else. Anywhere else.

  8. And one more thing. The free market isn’t about playing nice. It’s about getting the best terms for you, your family, and your shareholders. The fact is that the people you’re competing against are working for their self-interest as much as you are, and in that contest, everyone’s better interests are served in the long run. That is the very beauty of capitalism.

  9. The correct answers are:

    Q1) Have Russians learned nothing from their own history?
    A1) No

    Q2) Do they even know it?
    A2) No

    P.S.
    This is not a joke.

  10. Scott, you forget to mention that Russia refuses to allow Ukraine to charge market rates for gas transit. The Russian statement about market rates cuts both ways.

  11. For orknexus.
    Russian people are not stupid unlike you. Russian government must not connive at thieves.
    The footmen Yuschenko & Co plunders Russian and EU Gas during since 2004. Our patience is at an end. Yuschenko & Co and they democratic patrons in the West contry are responsible for this terrible suffering of Ukrainian and EU people. This problem situation will be resolve after good changes in Ukrainian political scene.

  12. In response to Russian announcements that it was Ukrainians who have shut down flow of Russian gas to Europe, Ukrainians say that this is complete BS as they physically do not have ability to do that because all the controls are on Russian side of the border pump station.

    See source in Russian:
    http://censor.net.ua/go/offer/ResourceID/109385.html

  13. There are Russian human beings. Then there are rooskie sovoks.

    Why do Russians allow themselves to be subjugated to rooskie sovoks?

    It it very, very clear that Gazprom is not a business – it is a political weapon.

    Gaprom takes its orders from a cancerous collection of cells, a failed abortion, a KGB psycho thug named Vlad Dracul Putin.

    His “vision” is not to sell gas on a commercial basis. His “vision” is to subjugate the rest of the world.

    With lots of corruption mixed in. After all, they did bribe Gerhard Schroder, the former German chancellor, to be on the board of a roosha company.

    And they throw in a huge cut for select Kremlin insiders through ROSUKRENERGO.

    If the rooshan cut-off of gas (which, in typical sovok fashion roosha and Gazprom are lying about, and are trying to blame it on Ukraine) doesn’t open the EU’s eyes once and for all, especially after the Georgia invasion, nothing well.

    http://www.timesonline.co.uk/tol/news/world/europe/article5458245.ece

  14. Okay, let’s wait till the Stockholm Arbitration Court has its say. :-)

  15. Pingback: Streetwise Professor » That Didn’t Last Long

  16. I also supporter of court decision if necessary. But unfortunately only Ukrainian politicians are responsible for this terrible accident. US pressed for these gangsters to Ukrainian throne. There was a criminal ballot rigging, which was named as Oran. revolu! Responsibility of this situation must bear US and part of EU (which was helping the rabble of Oran. revolu.). Russia is not guilty of it! Russia have responsible to Belorussia, but these country executes its duti in full!
    “His “vision” is not to sell gas on a commercial basis. His “vision” is to subjugate the rest of the world.” – That is lie again! Russia 6 month was persuading to Oranjevaja crowd (not Ukrainian people, who are in slavery) to sign mutually beneficial contract (draft of this paper stipulats a preference price provisions – lower than markets price). But Oranjevaja crowd failed this draft! Yschenco & Co are thieves and they wish plunder and plunder and plunder! It will be possible only in panic situation and legal indefiniteness! It is result of US democraty-support!!!

  17. Thank you, Streetwise Professor.

    One of the things that the sovok rooskies have been blubbering about endlessly is that Ukraine “refuses” to pay the “market price” for gas.

    Where can one find the “market price” for rooshan gas?

    I know I can easily find the market price for gas and oil in the US, and elsewhere in the world, by going to – well, the Streetwise Professor, for one, of assorted government web sites, or market newsletters, or even the web sites for assorted exchanges where such things are traded.

    rooskie sovoks keep spewing on and on about “market price” – but there is none, and that’s the last thing they have on their mind.

    Stirring the pot, and political domination, and a quick bribe or two or cut of profits is what they have on their mind.

    Does roosha want to “disturb the gas”? You betcha.

    Their entire “vision” for world domination depends on it – and high oil and gas prices.

  18. I am Russian, are you too dense to have not figured out exactly who is “plundering” Russia? Putin’s personal worth is rumored to be about $40 billion. God only knows the combined worth of his KGB clan members at the Kremlin who have been sucking the treasury dry for years.

    There hasn’t been any real infrastructure investment for years in Russia. Just lame promises. The roads are as bad as Africa’s. Only 1 out of 5 Russians are connected to the internet, now, that’s pathetic in this day and age. The army is in a shambles. Basically the place is a deteriorating Third World dump. Corruption on every level is getting worse. You can’t design or manufacture anything that anyone wants to buy including your own crappy cars at home. That was the issue in the Valdivostok protest. No one wants them. All of this is common knowledge and verified from the Russian press no less. There are no property rights laws of any value and barely a middle class in Russia. The GNP is only the size of California, nothing more and without high oil prices a whole lot less.

    Russia is, I’ll repeat, a dump. Eight years of Putin and you fools have nothing in return, but, more Putin fascism to count on.

    You really are an idiot to keep on ranting here when all empirical evidence and verifiable facts make you look like a fool. You simply convince us that Russia is a pathetic place with poorly educated and illiberal people. You will never have a decent democratic society being a Useful Idiot to Putin and so willfully ignorant. The world has moved on, my friend, and Russia remains a marginal failed state in a league with other failed states. You are part of the problem.

    What are you, a paid shill for Putin that haunts western internet sites or the Russian LJ blogs? Or just some poorly informed naive Russian teenager wasting too much time at the computer? You sure aren’t a lawyer even in a dump like Putin’s Russia. You simply don’t have the critical thinking skills.

  19. Here is a clear case of returning to the table and making a compromise. Ukraine should pay a fair price and Russia should stop letting people freeze in the dark (talk about using a resource to make a political point). If the Ukrainians won’t pay $200 and the Russians want $250, make it $225. Problem solved.

  20. @penny…,”a pathetic place with poorly educated and illiberal people”.
    “illiberal”…would that be another term for conservative?? LOL

  21. Hooray for Penny!!!
    Unfortunately “I am Russian” is probably too brainwashed to listen.

  22. Thank you, “I am Russian”, for this is what I never expected to hear from you, because it is the truth we all are very well aware of:

    “January 7, 2009 at 11:43 am – This problem situation will be resolve after good changes in Ukrainian political scene”.

    I.e. when Ukrainian democratic pro-Western government will be replaced by Kremlin-friendly faces all problems with gas disappear in an instant. What a miracle that would be. Oh, brave new world! ;)

  23. Russia has nothing left to lose. A gas showdown with Ukraine was coming sooner or later in any case. Better sooner than later.

    So I hear you say that Russia’s reputation as an energy supplier will be harmed by the latest gas row. But that is the same old song and it is falling on quite deaf ears in Moscow these days (during this current US-induced world economic crisis which has seen energy prices in general plunge).

    Russia has energy and lots of it, and Europe and the world want it and need it. If that simple formula evades your capacity for logic and calculation then I’m afraid I am quite unable to hep you.

    It’s not as if Europe is making plans to increase Russian energy imports “if only” the Kremlin can find some way to get along with Ukraine’s CIA-installed regime (let’s say by continuing to supply Ukraine’s anti-Russian regime with energy at a fraction of real world-market prices). On the contrary, what I am hearing is that Europe wants to lessen its dependence on Russian energy no matter what. So if now is not the correct time for a showdown over this, then when will it be?

    Russia has been a reliable partner with Western Europe in the energy sphere for over 40 years. Russia has also indicated that it is ready, willing and able to continue on in this role for the foreseeable future. A way must be found to bypass unreliable transit states such as Ukraine… or … whatever.

    Russia can use its own enormous reserves of hydrocarbon energy to develop and enhance the competitiveness of its own domestic economy or Russia can share these natural resources with its neighbors. Russia has demonstrated its willingness to share. But Russia is understandably no longer willing to subsidize the economy of Ukraine’s CIA-installed pro-NATO, pro-US (and anti-Russian) elite with below-market Russian energy. For Russia now is the zero hour. It’s really simple. And it’s really Europe’s choice as to which way they want to proceed in the future.

    If the US and Europe truly believe that Ukraine’s corrupt oligarch-ruled energy firms deserve below-market subsidized energy then they are going to have to pay those subsidies. Russia is no longer willing (or even able) to continue to pay for such subsidies.

    No. Ukraine is no longer “Russia’s problem.” Today Ukraine is “pro-western” and that makes it “your problem,” not ours. If you didn’t see this coming then I am truly sorry for you, but I can only suggest that you put your fingers into a 220v electrical socket and end your suffering right now. Sorry that I have no better suggestions for you, but such is such. Russia’s gas is — Russia’s.

    Of course Europe has alternatives. They can plaster Europe’s best agricultural lands with windmills and solar panels and charge their domestic firms and consumers 800-1200% world market prices for energy.

    Of course Europe also has the option of pressing ahead with North-Stream and South-Stream pipelines (as Moscow has long urged) and pay maybe 110-125% of current prices. But ultimately this will be Europe’s choice, not Russia’s.

    Russia is neutral is this. Russia can ship its gas to Europe with ‘preferential’ prices via new pipelines (which bypass the unreliable transit states) or Russia can liquefy its gas and ship it to world markets (at world market prices) via tanker ships.

    Russia has long called for EU monitors to supervise the transport of gas to Europe, under a transparent and open regime. Ukraine has consistently refused to allow Russian and international inspectors onto its territory for the purpose of supervising and verifying gas inputs and outputs.

    Russia will survive (and prosper) regardless of Europe’s decision in these matters. Of this I am 100% certain. And… Whatever… Make a decision already. Russia has already decided.

  24. I was just filing my cuttings and came across this one…

    Moscow Times, Dec 23rd 2008: “Putin’s Teflon Image Takes a Hit” on how his popularity rating is nosediving – with the picture of the anti-Putin poster in car windscreen in Vladivostok. I love that caption: ‘Take demons alive’ (You should put that on your side banner, LR)

    Then I get to thinking…

    1. He will know that stuff’s being printed.
    2. How did he boost his popularity in the early days? Declared war on Chechnya. it made him look tough.

    Incidentally, I saw the Russia Today report on Putin’s meeting with the Gazprom boss. Typical tough man pose. The Putin they all used to swoon over.

    So is this Ukraine affair all stirred up now just because poor old Vlad thinks the people don’t love him any more? And because he wants to throw a few crumbs to the petro-siloviki to let them know he still can take care of them if they back him?

    In any other country other than Russia it would be an insane suggestion. But now it could be just that simple.

  25. If Russia are using gas as a political weapon against Ukraine then why are they increasing gas prices for allies such as Belarus?

    http://www.reuters.com/article/GCA-Oil/idUSTRE4BL0L420081222

    How do you think Canada or Mexico would respond if the US defaulted on payments? Ukraines excuse we gave our money to a third party to pay Gazprom would not be accepted anywhere!

    If independent EU monitors where allowed into measuring stations inside Ukraine the questions of where is the missing gas disappeared could be determined. Gazprom as asking for this and its Ukraine refusing. While they have no obligations in these regards to refuse to do so surely cast doubts on their claims?

    http://www.interfax.com.ua/eng/press-conference/4316/

    According to a Ukrainian parliamentary investigation the Ukrainian President took a bribe in order to sell arms at 20% discount to Georgia. Who went on to use those arms in a war with Russia. Then the Ukrainian President comes out and heavily criticses Russia in regards that conflict. The investigation identified the delivery of artillery systems and ammunition to the Georgian port of Batumi on September 22 under the guise of humanitarian aid. Then Ukraine expects Russia to continue giving then discounted gas!.

    http://ukraine.suite101.com/article.cfm/ukrainian_arms_sales_money_missing

    LA RUSSOPHOBE RESPONDS

    If you were to actually read our editorial, rather than simply being consumed with your own sweaty fantasies, you’d see that we aren’t accusing Russia of “using gas as a political weapon against Ukraine” but quite the opposite, of using gas as an economic weapon to upset world markets and increase Russia’s revenues due to panic.

    And if you paid a bit more attention to the news, rather than the weird strains of it that you imagine suit your own ends, you’d see that the entire world has condemned Russia’s actions, exactly as it did in Ukraine. Instead of urging Russia to reconsider its position, you encourage it to proceed further into the crapper. That’s just plain stupid, and you are not doing the Russian people any favors.

  26. Misha, “Russia’s gas is Russia’s” not really.
    They have to buy it from Turkmenistan & Khazakstan.
    In reality when it comes to gas, Russia is a glorified transit country.

  27. Hmm, the crude oil prices went up on Tuesday because of the Russia-Ukraine spat and the Gaza crisis but the prices are going down again now becaue of the drastic increase of US’ domestic reserves due to low interest in actually buying the (crude) oil. For now it is just below $43. That’s still considerably less than the $50 that Putin has quoted as necessary for Russia’s survival and is even further from $70 that was needed for financial surplus. So: the plan to boost oil prices by creating an international crisis has failed, plus Russia’s reputation has suffered yet another blow. And while there’s no gas being sent to Ukraine and from there on, Russia is not getting paid at all. I wonder if that really is preferable to not being happy with the previous “sub-market-level” (quotation marks because I don’t know what the market level prices are and am too lazy to find out, just taking the word of Russian authorities here and just because it’s the word of Russian “authorities”, it has to be in quotation marks) prices?

    Any logically thinking European will see that Russia is NOT a reliable business partner. Not after the shut-down this winter (as well as the shut-down last winter…), not after declaring certain companies as belonging to the state when just a day before they belonged to a Western European business consortium etc etc. If anything, Russia can be relied on to turn everything it touches into s*** rather than gold. And therefore it is only logical that European businesses and governments are looking to make business with countries that can be relied upon. Even if the price is higher because the price of being cut off gas in the middle of a harsh winter is too high.

  28. er…, good point. Aside from the occasional spike in oil/gas prices the long term price trend is down. Russia’s reserves are slipping too. The idiots have driven off any western partners that would have invested in exploration and higher production. Russia is a toxic investment. KGB thugs aren’t equipped to preside over a modern economy. The good times are over and there isn’t a plan B for them. As Khordorkovsky has pointed out Russia needs to diversify out of a commodity economy and invest in its people. But, a paranoid autocratic regime can’t afford that if it wants to stay in power. Putin is going after internet users as freedom of speech and a window to the world of broader ideas is intolerable.

    The tenacity of the morally bankrupted Useful Idiots that have surfaced on this site to defend Putin’s gangster regime is disgusting. They hypocritically defend totalitarian conditions applied to people as Putin has been doing in Russia which they themselves wouldn’t tolerate.

  29. Mishka, mishka, mishka, mishka – what a stupid fool you are.

    The words “cutting off your nose to spite your face” have no meaning for you, do they.

    In typical rooshan sovok attitude, you’re going to say “everything is hell, it’s our gas, sour grapes, we don’t want to sell it to you anyway since you said roosha is unreliable, and Ukraine is your problem now, and we told you so.”

    What were we talking about?

    Oh, yeah, the sale of gas.

    A commercial transaction which takes place elsewhere in the civilized world on a daily basis in an orderly, non-confrontational manner.

    Not so in roosha – the sale of gas is not just business, it’s a religious crusade for world domination, with lots of desire for corruption thrown in.

    As Andrew pointed out, what roosha sells is a mix of Central Asian gas and some rooshan gas. Gazprom tried to lock up the supply, but it’s not like the good old days back in 1994 or so, when roosha – and Ukraine – sent galoshes to the Central Asian countries as payment “in kind” for gas.

    Let me see if I can put a little different twist on this.

    Ever since about 1992, when all of the former sovoks republic insiders figured out that they could profit mightily from corruption, the game has been to get Central Asian gas really cheap, and sell it to Europe at a nice markup.

    And here’s the catch – in order to hide the corruption, assorted middlemen came in. In Ukraine, it is RosUkrEnergo, and its predecessors.

    Neat little scheme – 50% to some Ukrainian oligarchs, and 50% to — Gazprom insiders. In each country.

    Plus – through these complicated little arrangements, and payment-in-kind arrangements, the politicians in each country could pretend to be paying less than the actual cost.

    It’s not a bad little scheme – Ukrainian oligarchs (2, or maybe 3 of them – Firtash, Fursin, and Simon Mogilievych, hiding out in maskva) and rooshan oligarch Gazprom/Kremlin insiders, including Putin, lining their pockets on the gas “beezniss.”

    Now it’s all gone to hell. Prices have fallen, and there is an attempt to cut out the corruption.

    What’s a corrupt rooskie sovok to do, except stamp his feet and pout, in typical rooskie sovok fashion?

    The only thing left is to take off one’s shoe, pound the table, throw temper tantrums in Brussels.

    Oh, yeah – and point the finger at your partner in crime, Ukraine.

    mishka, you are seriously and totally a rooskie DOLT.

    Let’s see how long rooshans can live by eating their gas.

    No more $3,000 shoes in maskva, no more $200,000 Maseratis.

    rooshans can sit and look at and admire “their” – gas.

    Here’s the link from the Washington Quarterly.

    You might try reading it, and you might actually learn something.

    Click to access 09jan_ChowElkind.pdf

  30. “If you were to actually read our editorial, rather than simply being consumed with your own sweaty fantasies, you’d see that we aren’t accusing Russia of “using gas as a political weapon against Ukraine” but quite the opposite, of using gas as an economic weapon to upset world markets and increase Russia’s revenues due to panic.”

    I don’t see your point though. How is the use of gas as an economic weapon the opposite of political? Surely the economy and price of gas in any country is very political.

    Though my point still stands no matter what you want to call it economic or politcal, why is Russia increasing the cost of gas to Belarus an ally if it is indeed using this as a political/economic weapon?

    http://www.reuters.com/article/GCA-Oil/idUSTRE4BL0L420081222

    “And if you paid a bit more attention to the news, rather than the weird strains of it that you imagine suit your own ends, you’d see that the entire world has condemned Russia’s actions, exactly as it did in Ukraine. Instead of urging Russia to reconsider its position, you encourage it to proceed further into the crapper. That’s just plain stupid, and you are not doing the Russian people any favors.”

    Sure I admitt that many countries have been critical towards Russia in regards the Georgian conflict. However NATO and the US if anything have been softening in regards to Russia.

    http://www.interfax.com.ua/eng/press-conference/4316/

    In this latest dispute the EU has been no harsher in Russia than the Ukraine.

    “It is unacceptable that the EU gas supply security is taken hostage to negotiations between Russia and Ukraine”

    EU spokeswoman Pia Ahrenkilde Hansen

    Though the bottom line is why should Russia sell gas to Ukraine for $235 dollars when the market price is $418. They offered Ukraine a deal costing $250. How is that not more than fair. What obligations do Russia have to Ukraine.

    Germany if anything is now getting closer to Russia in regards to gas. Working with Gazprom to open the Nord Stream resulting in up to 55 billion cubic metres of gas avoiding the Ukraine each year. Then the south stream will take a further 35 billion cubic metres out of the Ukraine route. The south stream has been agreed and partnership companies set up between Gazprom, Bulgaria, Italy, Serbia, Hungry, Greece and even Turkey. The Bulgarian parliment has already ratified agreements with Gazprom.

    http://en.wikipedia.org/wiki/South_Stream

    For Europe and Russia its about secruity of supply. Europe needs Russian gas and Russia needs Europe as customers. That means diversifing supply routes and reducing transit through Ukraine.

    Ukraine is the odd man out and slowly but surely Russia and European partners are building infrastructure including new supply routes and storage to bypass them.

    “The German federal government views the Nord Stream pipeline as indispensable in order to guarantee the transport of increasing amounts of gas to Europe in the future. The pipeline is therefore a project with a European dimension.“

    Report of the German federal government, 5 November 2008

    LA RUSSOPHOBE RESPOND:

    You don’t see the point because you didn’t read what we wrote,, dimwit propagandist. Russia couldn’t care less about money from Ukraine, it wants to kick up the price Europe pays by causing a panic. It is NOT simply trying to charge a fair price, it’s trying to avoid bankrupcy by corrupt means.

    If you can’t read our content fairly please don’t try to comment on it. It’s offensive and only results in making you look like a total fool.

  31. for penny
    You hava pathetic attempts to study me. But your own knowledge about Russia very poor!
    for orknexus
    “January 7, 2009 at 11:43 am – This problem situation will be resolve after good changes in Ukrainian political scene”. – is only possibly solve of problem. Oranjevaja crowd is no democratic government but alot of thives who should be return to US (or rather send to Ukrainian prison).

  32. “You don’t see the point because you didn’t read what we wrote,, dimwit propagandist. Russia couldn’t care less about money from Ukraine, it wants to kick up the price Europe pays by causing a panic. It is NOT simply trying to charge a fair price, it’s trying to avoid bankrupcy by corrupt means.

    If you can’t read our content fairly please don’t try to comment on it. It’s offensive and only results in making you look like a total fool.”

    Childish name calling is not a good way to make a point. You have shown no substance to your claim and for me it does not add up.

    For example if Gazprom is facing bankrupcy as you claim then it would be suicide to cut off gas to all of its markets in Europe. Also gas prices are fixed in contracts between Gazprom and its customers. With Gazprom and Wintershall Erdgas Handelshaus its fixed for 35 years. With Italy 20 years. So forcing an increase in gas prices as you claim would have not shortterm effects on these consumers or profit.

    Also as I have shown Gazprom has been building relationships with most of eastern and central europe in regards to gas transit mainly in regards the nord and south streams. These partnerships include ratifing agreements in some parliments. Its clear Russia is building partnerships and infastructure simply to avoid Ukraine. If Russia wants to reduce gas flow to Europe driving up prices then why only cut of Ukraine. Why not Poland or Belarus etc.

    So again what is immoral about asking Ukraine to pay $250 for a product with the market value of $418?

    LA RUSSOPHOBE RESPONDS:

    Thanks for your application to be the ultimate arbiter of evidence and maturity on this blog, but unfortunately your application has been rejected.

    We didn’t give evidence to support a point we didn’t try to make? What a shock!

    It’s immoral when the purpose is to upset the gas markets not to get revenue from Ukraine. Can you read at all, monkey? Russia has broken its promise to be a reliable partner and, if you read the news, you know that it has already been forced to back down.

    Nitwit. Your comments are meaningless drivel and you are obviously unable to appreciate your own insignificance.

  33. Russia sells gas to Europe under long term contracts that stipulate the price of gas based on the price of oil (for equivalent BTU energy content). The price price of gas is re-adjusted twice per year (every 6 months) to reflect changes in oil prices. Russia supplies about 25% of Europe’s total gas supply and about 80% of that Russian gas passes through Ukraine’s Soviet-era pipelines. Russia has long sought to diversify the transit routes in order to ensure both security of supply (for Europe) and security of demand (for Russia). The two largest projects are the Nord-Stream (“North Stream”) and South Stream pipeline projects. These projects will bypass unstable transit states such as Ukraine and pipe Russian gas directly to Russia’s best customers in Western Europe. Russia is also participating in joint ventures to construct massive gas storage facilities in Europe, which would improve the continent’s ability to weather temporary disruptions to supply such as we are now seeing. The largest gas storage facility in the world is under construction in Belgium and Russia’s Gazprom is a partner in this joint venture.

    But until these projects come online Europe will continue to remain overly dependent on the Ukrainian transit routes and thus vulnerable to periodic supply disruptions such as we are now seeing.

    Since the fall of the USSR in 1991, Ukraine has continued to receive Russian gas at a fraction of the price Europe pays. Even at these below-market rates Ukraine frequently fails to pay. For 2008 Ukraine’s price was $179.50 per thousand cubic meters (tcm). This was less than half the average European price of $418 per tcm. The cumulative economic subsidy which Russia has provided to the Ukrainian economy (in the form of subsidized gas) since Ukrainian independence in 1991 amounts to some $150 billion, measured in constant 2009 dollars.

    Since 2008 Russia has been paying the full “netback” price to Central Asian gas producers. (The “netback” price is the full European market price, minus only an allowance for transportation costs.) This absurd and unsustainable situation now sees Russia buying gas in Turkmenistan for $350 per tcm and selling it to Ukraine for $179.50 (a loss of $170.50 per tcm right off the top, not even counting transportation costs).

    The bulk of Russian gas does not come from Central Asia, but rather from Central Siberia, as this pipeline map illustrates. In addition China is now investing in large scale energy projects in Central Asia which will move the bulk of available Central Asian reserves east (not west).

    As most of Russia’s older oil and gas fields are now facing declining productivity, Russia faces the necessity of making massive investments in energy projects in its far east and arctic regions in order to continue to meet its energy export obligations. This has dramatically raised the marginal cost per unit of energy extracted. Russia is no longer willing (or even able) to continue to deliver energy to customers who refuse to pay market rates (let alone those customers who frequently refuse to pay at all).

    That Ukraine is a relatively poor country and that it has been adversely impacted by the US-induced global financial crisis is doubtless true, but frankly this is not Russia’s problem. Russia is also a relatively poor country and Russia has its own problems to worry about.

    If Europe or the U.S. truly believe that Ukraine “deserves” to have its energy-inefficient economy and its culture of political and business corruption subsidized to the tune of billions of dollars annually, for the foreseeable future, then some formula will have to be arrived at whereby Europe and the US can pay those subsidies. Russia is no longer willing or able to carry Ukraine’s weight.

    Russia has long indicated that former Soviet Republics must expect a transition to market prices for gas (as already happened with oil long ago, more or less immediately after the fall of the USSR). Russia has demonstrated remarkable patience and a willingness to phase in market prices over a number of years, to help former Soviet economies make the transition. But far from making efforts for such a transition, Ukraine’s economy remains the most energy-inefficient economy in the world. Ukraine continues to use more natural gas per unit of GDP than any other country on earth, including gas-rich Russia itself. Ukraine has not invested in any meaningful way in energy-saving technologies nor has it created a climate favorable to investments in the development of its own domestic energy resources, which by some estimates are not insubstantial.

    Ukraine’s gas strategy has been to exploit its monopoly over Soviet-era European gas transit routes in order to extract “rent” from Russia. This “rent” basically takes three forms: (1) Cash transit fees which Russia pays to Ukraine for the transport of Russian gas across Ukrainian territory. These transit fees are a normal and customary part of the gas business everywhere in the world. Of course Russia understands that it costs money to build and maintain transportation infrastructure. Russia is certainly willing to pay reasonable, customary (and competitive) transit fees, which cover the cost of constructing and maintaining gas transit facilities as well as a reasonable rate of return on the capital invested in such projects. (2) Ukraine has also insisted on receiving Russian gas at below market prices. This of course is not a “normal” aspect of the gas business, or any other business, in a market-based economy. This would be as if I contracted with a trucking firm to transport a thousand chickens, at a mutually agreed transport price, and then the trucking firm came back to me and insisted that I also sell them as many chickens and they cared to purchase, for half price. (3) Ukraine has also periodically engaged in the outright pilferage and theft of Russian gas supplies in transit to European markets, paying nothing at all for this gas. This would be as if I contracted with a trucking firm for the delivery of chickens, but half the chickens were simply missing when the truck was opened at its destination. How much do you want to be I will not be doing much business with that firm in the future?

    To say that Ukraine is not a reliable and profitable partner for the transportation of Russian energy is the understatement of the century. Perhaps this will change in the future and Ukraine might become a more reliable and normal partner. But frankly I don’t see this happening at least until alternative transport routes are opened. Ukraine continues to believe that it can get whatever it wants from Russia by holding Europe’s gas supply hostage. If the current crisis does not make this abundantly clear then I don’t know what would. Perhaps Ukraine can maintain the status quo for some years, and continue to extract monopolist rent from European gas supplies, but if so Europe is going to have to pay. Russia is finished paying for this nonsense.

    The era of cheap (and sometimes free) Russian gas in Ukraine is fast coming to an end. The sooner Europe and the world (and especially Ukraine) come to grips with this reality the better off everyone will be.

    I would challenge anyone to name one Western energy company or utility that would continue to provide products and services to a non-paying “deadbeat” customer, year after year and decade after decade. As the chairman of Gazprom said recently, “when you receive a product you have to pay for it. If you don’t pay then you are not going to continue to receive it.”

  34. Misha, maybe you can edit this Russian dude’s posts before they see the light of day? You are making the same tedious propaganda points as he is, but with much better English! Help out your comrade, eh?

  35. Hi, my name is Mishka, I am a Kremlin propagandist, if you take the price of chickens, and divide them by 2, then multiply them by 4, then take the square root of the hypotenuse of Putin’s ass, multiplied by the Wicked Witch of the West from the “Wizard of Oz,” blah, blah, blah, blah, blah, blah, blah.

    Where was I, Mishka, going with this?

    Oh, yeah, everyone should bend over, and bow down to Putin, because he has stolen billions of dollars, and he is a KGB thug, and I, Mishka, love to be ravaged by KGB thugs.

    Oh, Putin, yeah, Putin, stick it to me, oh, yeah, blah, blah, blah, blah.

  36. Duncan, got a link to support that Gazprom has fixed gas price contracts with Wintershall Erdgas Handelshaus for “35 years” and with Italy for “20 ” years? I find that absolutely not believable.

  37. Even if those contracts exists, the price of natural gas is indexed to the price of crude oil. Contract or no contract, the money that GAZPROM gets from the sale of natural gas will be going down drastically in the next six months.

  38. There are no friends Russia has exept for Army and Fleet.

    You guys are being naive. Could you tell me why would anything on Earth stop Russia?
    Would US risk being nuked and try to defend Ukraine and Georgia?

    “World powers dont commit suicide for their allies.”

    Russia has absolutely nothing to loose after Perestroika. So why not to act a bit agressively?
    West wont ever react to this…

    There is a great need for spheres of influence in europe. And eastern europe is definitely Russian.

  39. “It’s immoral when the purpose is to upset the gas markets not to get revenue from Ukraine. Can you read at all, monkey?”

    Do you have a physic link to Gazprom president Alexei Miller or can you explain how you know what he is thinking? I can read what you say, though yet again you cannot explain how you come to that conclusion?

    You cannot explain why Ukraine should get a better deal even than Belarus (note Belarus price is based on netback) also a transit country and Russian ally?

    You cannot explain how $250 is not a fair price for a product with a market value of $418. How is it immoral to sell a product for $168 below market price? Its a simple question that all the russophobes have been avoiding, why?

    If Russia has broken its promise to be a reliable partner then Ukraine has also broken its promise to be a reliable gas transit?

    You claim Europe views Russia as an unreliable partner, yet as I speak Germany, Holland, Italy, Bulgaria, Greece, Serbia etc are all as we speak helping construct the Nord and south streams helping Gazprom bypass not only Ukraine but also other states it considers as unreliable in the Balkans. Europe needs Russian gas and its clear that its Ukraine who’s going to be frozen out.

    Childish name calling is an old attack the messenger technique instead of the message, for what ever reason in reality is easy to see through and reflects poorly on you.

  40. Here’s an interview with someone who knows – the former Deputy Energy Minister for Russia.

    Turns out that roosha/gazprom intentionally planned the gas war/gas cutoff.

    And – there is no market price. As has already been pointed out by various experts, including the Washington Quarterly article (link below – again).

    Contracts are indexed to the world price of oil.

    http://www.rferl.org/content/Interview_Gazprom_Harms_Russian_Interests_/1367968.html

    Click to access 09jan_ChowElkind.pdf

  41. Alexander II, given the present state of the Russian army and navy, with “friends” like those, Russia does not need enemies ;)

  42. I agree with Misha who gave a panchrest about present discussion.

  43. 2. You said: “You can’t design or manufacture anything that anyone wants to buy including your own crappy cars at home. That was the issue in the Valdivostok protest”.
    I comment that there is not any country in the world which would be capable to make all goods. Our personal cars no well it is true but they have own market niche (in Russia and in the Near Abroad) because their are cheap and simply in repair. But passenger cars stand only the end of the Russian goods list. Cosmonautics, rocket production (citisen and military), nuclear physics, nuclear chemistry, nanotechnology, defence industry – that is only part of our production! Many countries in the World make cars but very small part of them are capable to make Russian prodution (if so exist at all)!
    Valdivostok protest is not a secret in Russia. But Russian know also that it is a economic protest. Such protests happened and happen in the different points of World. I would remind you that our “democratic gouvernment in Georgia and Estonia ” gave short shrift to protestant!

  44. Penny
    “Putin’s personal worth is rumored to be about $40 billion”. – Exactly “is rumored”, I add – is wild rumour and you is rumour spreader! You has not any facts only fantasies (but in the best variant – guesses).

  45. Penny
    I can add that Putin relatives and his colleagues are very positive and modest people unlike Ukrainian political elite (e.g. Yuoschenco son who is a disgrace to Ukrainian, you must know it, if you read anything)!
    http://www.gorod.lv/news/29328/son_jushchenko_suspect_of_an_attack_on_the_public_prosecutor
    http://www.sostav.ru/sotka/news/2005/08/02/58/http://www.compromat.ru/main/ukraina/juschenkosyn3_1.htm

  46. Alexander II,
    There is a great need for more democratic governments in the world. Not chest pounding morons who can’t get over their own inferiority complex. Sorry to inform you, the Russian Army and Navy are a joke. Beating up on tiny Georgia is about the best you can expect from them. Russia is “cruisin for a bruisin” otherwise. Russians have turned into “dog’s that bite the hand that feeds them” it seems, very sad.

  47. elmer,

    Reading a some of what Milov was saying I find it hard that he cannot understand pricing policy considering his role in the past. Some of the questions he poses are easily answered.

    for example he quoted “Belarus gets gas for $130; Armenia, for $110; Moldova, for $280; and Ukraine pays $180. There is no way to explain this pricing hierarchy.”

    Looking at it like that its true. However Gazprom has different contracts with each country which have completely different terms. For example Belarus is a netback price while Ukraine is not.

    Here is roughly what the new Belarussian contract consists of. The days of Russian subsidised gas are over for all old soviet states including allies.

    http://www.charter97.org/en/news/2008/12/24/13446/comments/

    Clearly Gazprom are pushing Belarus upto to “market price” clearly defined as average European price. How can Milov not understand this.

    Of course the Ukraine also supplies storage facilites which may or may not be factored in their contract. However what is certain is Gazprom will not bundle transit and gas supply in one contract with ukraine.

    While gas is tied to the price of oil, why nobody can explain to me as really they are completely separate. Its roughly 6 months behind. So gas prices should only start to drop in March/April. It could be clever to delay signing a new contract with gazprom intil those prices come down.

    Remeber Ukraine also still owns Gazprom money!

    Also I see nothing saying or suggesting Russia is using this as a poltical weapon can you point that out to me?

  48. Wow. What a heated debate over nothing. Read my lips: Gazprom is not capable of fulfilling its contractual obligations, period. Gazprom has hoped to secure sufficient supplies from Central Asia to cover the deficit, and it has failed. As simple as that.

  49. obamayomama
    “dog’s that bite the hand that feeds them” – the best proverb for Yuoschenko & Co in such situation!

  50. Duncan writes: “Remeber Ukraine also still owns Gazprom money!”

    Ukraine doesn’t owe GAZPROM a kopeck and could not owe GAZPROM anything because Ukraine doesn’t buy from GAZPROM as the latter set up an intermediary company between itself and Ukraine to deliver gas and collect monies from Ukraine. If that intermediary shell company does not pay GAZPROM the money it owes GAZPROM, then that is not Ukraine’s problem.

  51. Duncan, you and poor Mishka are sovok DOLTS!

    1) There is no “subsidized” price, and there is no “market price.”

    Gazprom sells gas in roosha at $58 – is that “subsidized”?

    “Subsidized” means less than actual cost. Gazprom keeps its costs secret.

    The way you rooskie sovoks use the term “subsidized,” it means that if someone else is paying $400, and Ukraine pays $200, it is simply less than $400.

    But that is not “subsidized.”

    2) There is no “market price,” because there is no competitive market for rooshan gas. Roosha has a monopoly on rooshan gas, and whatever gas it locked up from Central Asia.

    The fact that the prices vary significantly CONFIRMS that there is no “market price,” because in a competitive market, prices tend to get closer to each other, not farther apart.

    Ukraine has a monopoly on transit through Europe.

    Which is exactly why Ukraine has leverage over the stupid rooskies.

    What you little sovok rooskies have been blubbering about as “market price” is simply the result of negotiation of assorted contracts by Gazprom – and political favoritism.

    And trying to bludgeon countries into selling their pipelines to roosha, as happened with Belarus.

    You little rooskie sovoks can’t, and/or deliberately won’t, get elementary economic concepts through your head. And you feed your drivel to the stupid rooshans in roosha. Noone else believes your nonsense.

    3) Ukraine has paid for its gas in full. It owes Gazprom NOTHING, because the contracts are with ROSUKRENERGO.

    ROSUKRENERGO is now seeking $640 MILLION in PENALTIES. That is an absolutely astounding amount – for nothing. Ukraine prepaid its December gas.

    But, as usual, you little sovok rooskies are LIARS.

    4) It seems that roosha can’t deliver the gas anyway.

    5) You little rooskie sovoks take a very large amount of space to post your LIES.

  52. elmer

    1) There is no “subsidized” price, and there is no “market price.”

    Not true, Gazprom buys about 55 billion cubic metres of central asian gas and resells onto mostly Ukraine. Turkmenistan, Kazakhstan and Uzbekistan are all demanding European market prices. Upto 2009 Turkmenistan was charging Russia $340 . Effectively Gazprom has been and Ukraine believes should continue subsidising Ukriane.

    2) There is no “market price,” because there is no competitive market for rooshan gas. Roosha has a monopoly on rooshan gas, and whatever gas it locked up from Central Asia.

    Complete and utter nonsense. The European market is clearly a competative marketplace. Algeria, Norway and several Central asia countries all challenge for market share. Russia has about 25% of market share so it is a competative market. All central asian countries are now selling gas at “European market price” including selling to Russia as of 1st January 2009.

    The prices paid in Europe from Algeria, Norway, Algeria, Egypt, Libya , Russia and Central Asia sre close together showing a competative market. Only former USSR countries are paying well below market price.

    Ukraine does not deny it though instead indirectly admitts it. In response to Russia increase the gas price for Ukraine to the market price (European), Ukraines response was that they will increase gas transit to the transit market price. Something Gazprom is willing to do.

    3) Ukraine has paid for its gas in full. It owes Gazprom NOTHING, because the contracts are with ROSUKRENERGO.

    You are not privy to what or how contracts are signed in regards to Gazprom, ROSUKRENERGO or Naftogaz.

    Secondly Ukraine did pay RosUkrEnergo $1.522 billion but that payment did not go into Gazproms account and was still not in Gazproms account on Jan 7th. Under the terms of the contract for each day of posponement Ukraine are to pay 3% of the bill.

    Ukraine has not virtually admitted that it did take Russian gas to the tune of 21 million cubic meters of gas per day. A total of at least 86 million cubic meters of gas. Naftohaz claimed it was not stealing the gas but using it as technical gas for compressor stations. Heinz Hilbrecht of the European Commission Directorate-General for Transport and Energy stated that Ukraine was responsible for providing this gas not Gazprom.

    4) It seems that roosha can’t deliver the gas anyway.

    Certainlly not through Ukraine. It has increased supply through Belarus probably the only benefactors in all this. It has also put pressure on the construction of the Nord and South streams. Which are likely to come online sooner. Making gas cheaper for Europe and more profitable for Russia as they cut out the real middle man Ukraine.

  53. Actually Duncan, Gazprom and Russia have been demanding that Ukraine does not have the right to incease the transit price of gas to the EU, citing a CIS agreement which incidentally guarantees Ukraine gas at the Russian domestic rate.

    As fo this gem “You are not privy to what or how contracts are signed in regards to Gazprom, ROSUKRENERGO or Naftogaz.”

    What, and you are?

    As for the drivel about the payment going to the middleman (as per the signed agreement) but not to Gazprom, well bucko that is not Ukraines fault, but the middlemans. Especially when that “middleman” is partially owned by oligarchs loyal to OMG THE KREMLIN!!

    For the supply of technical gas, usually in such agreements the supplier provides the technical gas required as part of the transit payments. Please provide evidence to back up your claim about Heinz Hilbrechts comments with a link or other evidence as it sounds awfully like the bogus Russian agitprop from the war in Georgia.

    In addition as pointed out by “commentator” on one of the other articles, nothing gives Russia the right to break contracts by failing to supply central & eastern european states because of an argument with a third party.

    Commentator also pointed out that more than 1/2 of Russian food consumption transits through the EU & Ukraine. Maybe it might be a good idea to cut it off in retaliation? Not a nice thought really, but then neither is cutting off gas to europe in the middle of winter because of a dispute with a transit country.

    As for the absurd proposal that Nord & South stream will make energy costs lower in Europe, well you need your head read old bean.

    All that those projects will do is push up the price of gas, as Russia will feel it has a monoply on alternative supplies from central asia, not to mention the staggering costs (monetary & environmental) of building that length of undersea piping. Not to mention the fact that NO company with a brain wants to do business in Russia these days so having seen new russian projects first hand, I would not reccomend putting them in charge of a lego set let alone anything technical.

    Putting all your eggs in one basket, especially one controlled by an autocratic meglomaniac like Putin is pretty dim, and I think Europe would be better served by Nabucco, to which Khazakstan, Azerbaijan, Turkmenistan, Georgia, & Turkey are all comitted.

  54. “Gazprom and Russia have been demanding that Ukraine does not have the right to incease the transit price of gas to the EU, citing a CIS agreement which incidentally guarantees Ukraine gas at the Russian domestic rate.”

    This is misleading. Of course Gazprom has an agreement on gas transit price with Ukraine until 2010. When that contract expires they are willing to pay market price.

    http://news.xinhuanet.com/english/2009-01/09/content_10626709.htm

    LA RUSSOPHOBE RESPONDS:

    What’s misleading, you freakishly dishonest simpleton, is that the only source for your claim is Vladimir Putin yet you do not reveal that fact. Shame on you. Pathetic and outrageous.

    “As for the drivel about the payment going to the middleman (as per the signed agreement) but not to Gazprom, well bucko that is not Ukraines fault, but the middlemans.”

    Again the term middle man is misleading. In reality there is no middle man as ROSUKRENERGO is owned by Gazprom and the Ukrainians. Also the 3% fine per day has still to be paid to either Gazprom or ROSUKRENERGO.

    “For the supply of technical gas, usually in such agreements the supplier provides the technical gas required as part of the transit payments.Please provide evidence to back up your claim about Heinz Hilbrechts comments with a link or other evidence as it sounds awfully like the bogus Russian agitprop from the war in Georgia.”

    So I refer you to the below. Though its strange how this site has not mentioned that Georgia has cut gas supplies to South Ossetia since the conflict.

    “Heinz Hilbrecht, the European Commission’s director in charge of energy-supply security, said on January 8 that Gazprom’s and Naftohaz’s transit contract stipulates that responsibility for providing the 21 mcm falls to Ukraine. ”

    http://www.globalsecurity.org/military/library/news/2009/01/mil-090108-rferl01.htm

    “In addition as pointed out by “commentator” on one of the other articles, nothing gives Russia the right to break contracts by failing to supply central & eastern european states because of an argument with a third party.”

    What contracts are you privy too, too make such a claim. Gas passing through Ukraine is outside Gazproms control and there are no alternatives allowing Gazprom to claim force majeure with any third parties.

    “I think Europe would be better served by Nabucco, to which Khazakstan, Azerbaijan, Turkmenistan, Georgia, & Turkey are all comitted.”

    Really, considering only the very maximum the Nabucco line will ever produce is 31 bcm per annum. With only 16 bcm per annum going into the Baumgarten gas hub. When you consider that the Nord stream will have a capacity of 55 bcm per annum. Infact as far as I remember there are plans to feed the Nabucco pipeline from the Russian Blue stream to Turkey.

    Here is it as simple as I can put it. More transit countries increases costs as does distance. Reducing distance and transit countries reduces cost. The Nord and south stream will reduce costs to eastern and south europe also allowing these countries to become transits and reduce costs further. Thinking the Nabucco pipeline will make much impact is unlikely due to Europes decreasing natural gas reserves. Your proposal that Nabucco is an alternative is nothing more than a pipe dream.

  55. Actually dickhead, I mean Duncan, sorry right the first time, the gas pipeline to South Ossetia was damaged by the Russians, and the damage is in a village that is still illegally occupied by Russian forces. The RUSSIANS will not allow in Georgians to repair the pipeline, and the Georgians will not repair it untill the Russians withdraw.
    In addition, South Ossetains have comitted ethnic cleansing of Georgian civillians, and Russian/Ossetians still occupy villages in Georgia. Considering there is still effectively a state of war between Georgia and South Ossetia, and Russian interference with regards to access to the break in the line I am not at all surprised the gas line has not been fixed. The separatists did kind of bring it on themselves.

    Your link backs up what you say regards the Transit gas, however you failed to mention Hilbricht also says that the Russian response in cutting off the Gas was inapropriate. Kind of supports “commentator” really

    Your claims about Nabucco capacity are correct at 31 BCM but at least they will have enough gas to fill it, and would cut out a very unreliable and unpredictable middleman, Russia. And what does europes diminishing gas reserve have to do with Nabucco. It will be transporting central asian gas, not european.

    Nord stream may have a 2 stream DESIGN capacity of 55 BCM but it has more than a few problems such as the Baltic Republics refusing permission for it to be laid through their exclusive economic zones and/or territorial waters. I understand the Swedish & Finns (no great lovers of the Russians) are opposed on ecological reasons, so are the Danes for that matter. In addition the Russians will not have enough gas to fill it, as the only field currently able to supply it will only have 800 BCM availiable TOTAL
    http://www.jamestown.org/single/?no_cache=1&tx_ttnews%5Btt_news%5D=33660
    and the other potential field in the Barents sea has run into SEVERE DELAYS and cost overruns which mean that Nord Stream is a pipe dream for the forseeable future.

    Stick that in your pipe and smoke it Duncan

    The main area that makes the EU keen on Nabucco (which they are) is to diversify their suppliers. Monopolies, especially when the monopoly is held by an agressive, oppressive, autocratic and frequently genocidal group of KGB kleptomaniacs in the Kremlin, are no good for anyone, least of all the consumer.

  56. In addition South Stream will only have the same (31BCM) capacity as Nabucco, and is projected to cost twice as much to build and maintain, being a submarine pipeline, than the easier to construct and maintain overland Nabucco pipeline.
    The severe cost of building and maintaining submarine pipelines is also a BIG problem for Nord stream (as mentioned on the previous link).

  57. The best joke of all was Putin claiming that ecological protection for Nord stream would be provided by, of all things, the rust-bucket glow-in-the-dark Baltic fleet.

    You can just imagine how unhappy that makes the Swedes, who had a series of armed clashes (as in dropping depth charges & sinking the Russian bastards) with Russian submarines and fast attack boats in the late 70’s & early 80’s

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s