Thread: Russo-Ukrainian gas quarrell

So Russia switched off Ukraine's gas. Thoughts, reactions, etc.

Буде холодно у Києві....

Well, supposedly, Kiev says it can make it through the winter -- so they wouldn't necessarily be cold -- just chilly (but then again, assuming they could last, say only 3 days -- would they actually admit it?).

What I found really interesting is that Ukraine claims it has a contract right to 15% of the transported fuel, as a tariff for the pipeline crossing their territory. OK, fine -- but the Russian side is saying it would be straight-up theft, as it wasn't covered by the contract at all. Setting this entire issue aside for a second, shouldn't somebody know what the contract says, one way or the other -- or do these officials just sign these things while they're drunk?

Going back to the 15%, it will be interesting to see if the Ukrainians elect to exercise this right/theft since they'll essentially be taking European countries' oil -- Moscow will still have its money, presumably. Ultimately, though, they do seem to have quite a bit of leverage, since all these pipelines cross their territory. They may get cool and their industry may suffer, but Russia needs a way to sell that gas, too -- let's not forget that the oil/gas sector makes up a big chunk of their economy.

I can see the point that Russia makes. Why should it subsidise Ukraine?

But implementing such steap price increases overnight is harsh, especially on a weak economy like Ukraine's.

It is a bit hypocritical of the Ukrainian government to want to be all pro-West and be properly independant of Russia but at the same time have Russia subsidise them.

But as I said before, its more about the time frame, rather than the actual price increase.

Most of the gas that goes through Ukraine goes to Germany, and other major recipients are Austria, Italy and France. If Ukraine starts taking gas and the flow to these Western European countries is affected, they are just gonna get pissed with Russia and not Ukraine.

Originally Posted by TATY

But as I said before, its more about the time frame, rather than the actual price increase.

To which the Russian rebuttal would be: "We offered them loans and to postpone the rate hike for 3 months, if they'd just agree to it."

But, of course, you are basically right; the Russian side is being a bit ridiculous -- and let's just cut the crap, and admit it: Ukraine no longer wants to have a unique relationship with Russia, and so the Russians are cutting loose of its benefits -- not that there's anything wrong with that. Look, Kiev wants to be part of the NATO/EU club, which is fine, great, and wonderful, but they shouldn't expect to keep the perks from the "competing club." Let's flip the scenario a bit by playing that time-honored game "What if?" What if, say, a NATO member, were to join the Warsaw Pact (we're playing "what if" here, remember). Do you think that we'd say "ok, that's fine guys -- we're going to continue to supply you with military hardware!" Of course not. To offer up an analogy, you can run as a Republican or a Democrat -- but don't expect to be funded by both parties.

Oh, and the word crap is censored? What the crap!?!?

Originally Posted by Barmaley

What I found really interesting is that Ukraine claims it has a contract right to 15% of the transported fuel, as a tariff for the pipeline crossing their territory. .

I think that this is quite fair. That's why after I noticed that the local TV cable company had routed the cable to my neighbors' telvision through my appartment I felt compelled to get out my tool kit and tap into it. Wouldn't you?

А почему вожди-командиры розовых демократий молчат - грузины, там, всякие и проч? Что-то не слыхать г-на Саакашвили, что-то не протягивает он щедрую длань помощи своим ученикам-укаринцам. Мирно посапывает Молдавия со совоей красно-коммунистической демократией. Ба, совсем затухла Прибалтика со своими эсэсовцами! Есть такое слово - "кусты". Возможно, это кусты роз или апельсинов, но хорошее место, знаете-ли, чтобы сидеть тихо-претихо и обсираться со страху.

Извините за немножечко хулиганский комментарий.

Bad news, Ukraine. Mooching off over.

Анекдот в тему, недавно мною услышанный:
Январь 2006 года. Фрадков заходит к Путину.
- Европа в панике - без газа нечем топить.
- Пошлите им для сугреву партию оранжевых шарфиков.

My translation (for your checking ):
January, 2006. Fradkov came to Putin:
-- Europe is in panic -- without gas there are no fuel for heating
-- Send them a consignment of little orange scarfes for getting warm

Циничные анекдоты - хорошие анекдтоты, если они, конечно, не про тебя. Я тут BBC почитал, прямо "газки-шоу" какое-то.


http://news8.thdo.bbc.co.uk/hi/russian/ ... 568088.stm


Russian president clearly and cynically enough explained what was happening. These explanations are complete.

Coming from president's words, there are "good neighbours and friends", who are possible to make a compromise with in price issues. In practice it means inclusion of all the consumers of a "friendly country" in a varying degree in the chain of "Gazprom's" cross-financing, that the whole Russian industry uses now.

It would seem as though they have already tapped the keg:

Russia's state-controlled natural gas monopoly on Monday accused Ukraine of diverting about $25 million worth of Russian gas intended for other European countries, a day after Moscow halted deliveries to Kiev in a price dispute.

The only gas now being put into pipelines headed for Ukraine is intended for European customers, the company said.

Several countries reported problems Monday. Hungary, Poland and Austria all reported that gas piped to them from Russia through Ukraine had slowed down by between 14 and 40 percent.

http://news.yahoo.com/s/ap/20060102/...NlYwMlJVRPUCUl

You know this WHOOOLE problem could have been avoided if Ukraine didn't want 'independence' from the Union in 1991. Russia should shut off all the gas and oil... to the WORLD! That will teach them a lesson they wont soon be forgetting!

Ukraine didn't really want independance in 1991. It only went for independance once it was clear the Soviet Union was falling to pieces.

And with the current situation, Ukraine will pay in the end, but I think it'll continue to pilfer the gas designated for Europe, which will just make the affected countries pissed with Russia.

Germany's gas flow from Russia has dramatically gone down since the Russia "turned off" Ukraine's supply. Germany know it's because Ukraine is taking its gas, but they are just pissed with Russia. So Russia is pissing off some of it's biggest customers.

Well, firslty, Russia supplies only 30 percent of the Gas Ukraine uses, most of their gas comes from Turkmenistan. Secondly, Russia didn't turn off the gas, since they need to sell it to Europe (80% of the gas Russia sells the Europe is via the Ukraine), they just reduced the pressure such, that powerstations that run on gas could not work. Thirdly, east europe (not only Ukraine) is feeling the pain of Gazproms action, since there is a decreased supply of natural gas to them. I think all in all, it hurts Russia just as much as it does Ukraine (Europe will everntually find other suppliers).

Yes, we are aware they are not cutting the gas to Ukraine. Because how could they steal the gas if it was switched off.

And 30% is a significant proportion, especially in winter.

Russia's problem is the fact that so much of the gas has to travel through Ukraine, meaning they can'st simply turn off the supply.

It's up to Ukraine if they take the gas or not. Russia can't physically stop them taking gas without stopping the rest of Europe getting gas either.

According to BBC:
Moldovan President Vladimir Voronin said his country had also been cut off, after refusing to pay $160 per 1,000 cubic metres, according to the Itar-Tass news agency.

Originally Posted by kalinka_vinnie

Well, firslty, Russia supplies only 30 percent of the Gas Ukraine uses, most of their gas comes from Turkmenistan.

In 2005?

Today in 2006 Ukraine has no gas from Turkmenistan because the contract is not sigined yet. Turkmenistan sold all their first quarter gas to RF and got the money already.

Originally Posted by N

Originally Posted by kalinka_vinnie

Well, firslty, Russia supplies only 30 percent of the Gas Ukraine uses, most of their gas comes from Turkmenistan.

In 2005?

Today in 2006 Ukraine has no gas from Turkmenistan because the contract is not sigined yet. Turkmenistan sold all their first quarter gas to RF and got the money already.

Needless to say, you are right:

http://edition.cnn.com/2005/WORLD/europ ... ne.gas.ap/

"[...] Meanwhile, analysts said a Russian bid Thursday to buy up natural gas from another major supplier to Ukraine, Turkmenistan, would leave the Central Asian nation with little gas to sell to Ukraine.

But Ukrainian Prime Minister Yekhanurov told Kiev's private Era radio Friday that Ukraine would get the 40 billion cubic meters of natural gas it was scheduled to receive from Turkmenistan in 2006 "because an agreement has already been signed."

Yekhanurov said transport could be a problem. Turkmenistan sends gas to Ukraine via Russia. A Russian-run company, Rosukrenergo, charges Ukraine for the transit of Turkmen gas, and Gazprom owns the pipelines.

Ivan Varga, a director of Ukraine's state-run Naftogaz, said Ukrainian gas reserves from vast underground storage tanks could last until mid-April."

Here is another article:

http://www.nytimes.com/2006/01/03/inter ... r=homepage

MOSCOW, Jan. 2 - For President Vladimir V. Putin and Russia, 2006 was supposed to be a banner year. Instead, it has begun badly, and with problems of the Kremlin's own making.

The Kremlin, which labored in 2005 to distance itself from the ill will that accompanied its destruction of the Yukos oil company and the bungled handling of the rigged Ukrainian presidential election in 2004, has begun the new year with a display of politics and bullying, followed by partial retreat, that is raising fresh questions about its reliability as an international energy partner.

The problems are familiar. Even as Russia assumed the presidency of the Group of 8 industrial nations on Jan. 1, a position it hopes will improve its stature, Mr. Putin returned to two issues that have previously undercut his reputation: control and management of Russia's energy resources and Russia's waning influence in Ukraine.

The source of the trouble is a relatively straightforward question: What will Ukraine pay for imported Russian natural gas? It is a commodity that Ukraine, and much of Europe, desperately needs.

Gazprom, Russia's state-controlled gas monopoly, seeks $220 to $230 per 1,000 cubic meters for Ukraine, abandoning the favored rate of $50 for a more realistic market rate.

Ukraine, while agreeing that it must eventually pay market rates, seeks a much lower price and a transition period to a full rate - an arrangement that Russia has offered to other former Soviet nations.

The Kremlin's solution on Sunday was to reduce gas flows through the pipeline system for Ukraine, a major transshipment point for gas going to Western Europe.

The move, in retrospect, seems both spiteful and unwise, because Russia then tried to send gas through Ukraine to reach European customers on the other side.

One predictable result was a threat to winter fuel supplies in Europe. By Monday, declines in pipe pressure were reported in Austria, France, Italy, Moldova, Poland, Romania, Slovakia and Hungary, which said it would have to cut exports to Bosnia and Serbia and Montenegro.

Even Germany, usually a faithful Russian ally and Russia's largest gas customer, wondered aloud whether Russia could be trusted.

Michael Glos, the German economy minister, said in a radio interview that Germany would like to import even more gas, but could do so only "if we know that supplies from the east are dependable," according to Reuters.

Speaking of Russia, he added, "One should naturally act responsibly."

Supply concerns seemed to ease Monday as Gazprom announced it was restoring most of the gas flow to Ukraine. Mr. Putin, amid a fresh din of international criticism, appeared to blink. [bold by kalinka_vinnie ]

But a set of oddities and problems remained.

First among the oddities was that Mr. Putin, who managed to draw unflattering attention to himself, did so in a case where almost no one disputes that in principle he is right: Gazprom's customers should pay market prices.

Western governments, the European Union and the customers themselves have not argued otherwise. The issue is what market prices are, and how Ukraine should reach them.

To build what seemed a manageable business dispute with a neighbor into a problem for much of Europe, Mr. Putin, a former K.G.B. colonel who last year called the collapse of the Soviet Union a "the greatest geopolitical catastrophe of the century," cast himself anew.

For the purposes of this quarrel, he became not only a capitalist but a monopolist, embracing a free-market rationale in its harshest form. His position was clear: If Ukraine does not like the price, let its factories slow down, let its lights dim, let its people freeze. And let Europe worry if it will have heat this winter, too.

Other problems followed, as the dispute attracted more attention. While the Kremlin argued for market rates, it refused to acknowledge why Ukraine's gas prices have been so low. The job of clarifying the record fell to Andrei N. Illarionov, who was Mr. Putin's top economic adviser until he resigned in frustration last week.

Mr. Illarionov said in a radio interview that Ukraine's subsidized rate was essentially a problem of the Kremlin's own creation. Gazprom had agreed to the $50 price in 2004, he said on the Ekho Moskvy radio station, to help a Kremlin-backed candidate in Ukraine's presidential election.

The $50 deal was supposed to last until 2009, he said. But when the Kremlin's candidate lost the presidency to Viktor A. Yushchenko - who wants Ukraine to join the European Union and NATO - the Kremlin changed the rules. Market rates were invoked.

Moreover, Gazprom has been using different pricing criteria for different nations. Georgia pays $110 for the same amount of gas, as does Armenia and Azerbaijan. The Baltic states, which are members of the European Union, pay $120 to $125. Moldova pays $160. Belarus, a firm Kremlin ally, pays $47.

The origins of Ukraine's current rate, and this variable pricing regime, allowed critics to suggest that the Kremlin suffers from amnesia and hypocrisy alike.

The problems only piled on. Experts also charged that Mr. Putin had undermined the credibility of Gazprom, Russia's largest company.

Gazprom has been seeking international respect and trying to shed its image as a Kremlin stooge. But at important moments last week, it was not the company's official leadership making proposals for settlement, but Mr. Putin.

Mr. Putin's appearances put to rest any questions about who is handling this affair, and underscored anew that Gazprom is a company bound to the whims of a head of state.

Investors will get some measure of how the company has fared in the short term when the Russian stock market reopens after the Russian holiday season, on Jan. 10. The news, experts say, has been bad.

"Once again we are seeing that Gazprom is not a leading international company," said Dan Rapoport, managing director of CentreInvest, a Moscow-based investment firm, "but a tool of policy making for the Kremlin."

[quote]Moreover, Gazprom has been using different pricing criteria for different nations. Georgia pays $110 for the same amount of gas, as does Armenia and Azerbaijan. The Baltic states, which are members of the European Union, pay $120 to $125. Moldova pays $160. Belarus, a firm Kremlin ally, pays $47[quote]

Isn't that the key here. It is obviously politically motivated. If Moscow just admitted as such, it wouldn't make them look so bad.

Barmaley posted this in the Ukrainian longue, asking for a translation.



"And let those cursed Russians choke on their gas"

I did the translation myself so corrections are welcome.

Politically demotivated©, I reckon.

The original massive discount was politically motivated, but the conditions under which that massive discount was granted no longer apply, so...

Originally Posted by scotcher

Politically demotivated©, I reckon.

The original massive discount was politically motivated, but the conditions under which that massive discount was granted no longer apply, so...

Yes, but it still means it has to do with politics. E.g. Russia says they are bringing the price in line with EU prices. So then why are Belarus' still paying fuck all?

Cos Lukashenko sucks Putin's cock and Yushchenko won't.