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Wednesday, January 07, 2009

Russia Cuts Off Gas Supplies to EU Via Ukraine

As of 7:44 a.m. Kyiv time, Russia completely terminated its EU-bound gas supplies via Ukraine, Ukrainian media reported.

Russia issued a full denial, blaming Ukraine for the cut-off.

In a letter to European Commission President José Manuel Barroso, Ukrainian President Viktor Yushchenko offered reassurances that Ukraine does not siphon Russian gas but relies on its own reserves.

To verify this claim, Yushchenko welcomed the EU to send its observers to Ukrainian gas transit facilities.

José Manuel Barroso and Ukrainian Premier Yulia Tymoshenko have agreed on the arrangement, the Cabinet’s press service said.

Talks between Ukraine and Russia will resume Thursday.



Anonymous said...

Hello Taras:
I've been reading the news about this, and I really hope it may end in the best terms for all the parties involved.
By the way, thanks for the greeting in my blog on the occasion of January 6th. I chose that name for more personal reasons... ;)

Anonymous said...

Quite simply, Gazprom is a political weapon.

In the civilized world, nowhere does one find a business taking orders from a head of government (yes, I know, in roosha, Medvedev is president, but, as usual in roosha, that doesn't really matter).

I have no doubt that the EU will be looking for alternatives both to roosha and to Ukraine.

And, after the invasion of Georgia, if this doesn't open the EU's eyes to roosha's true intent, nothing will.

Anonymous said...

Here's an interview with the former Russian Deputy Energy Minister.

He states that Gazprom planned this gas war, the gas cutoff.

RFE/RL: Did the current gas crisis come as a surprise?

Vladimir Milov: Judging by the way that the negotiations have played out over the last few months, Gazprom was intentionally paving the way for a cutoff of gas. Unlike three years ago, Russia's leaders today -- and Gazprom's managers -- are acting confidently. In my opinion, they were psychologically prepared for a prolonged cutoff. Russia is acting more prepared, more harshly, and most likely seems prepared for an extended conflict. Gazprom seriously intends to ratchet up the pressure on Ukraine. It is perfectly possible that this is a continuation of the same political line that we first saw last August during the conflict with Georgia.

RFE/RL: At first Russia offered a price of $250 per 1,000 cubic meters, and now they are talking about a price of $450. How should we understand this pricing scheme, especially since Gazprom officials keep describing it as "market-based"?

RFE/RL's interview with Vladimir Milov in RussianMilov: I think that Gazprom's reference to market-level prices is just a sham. It doesn't have any relationship to reality. Over the last year, the differences in prices to former Soviet republics have been colossal. Belarus gets gas for $130; Armenia, for $110; Moldova, for $280; and Ukraine pays $180. There is no way to explain this pricing hierarchy.

This year the prices for different countries are also being established in completely different ways. And it is hard to explain this by tying it to some sort of "market prices." This is all the more true because the only so-called market basis that Gazprom has been referring to in recent years has been the world price of oil, which is now falling sharply. And this means that in a few months, gas in Europe should be being sold for less than $200 [per 1,000 cubic meters].

RFE/RL: Is this connection automatic?

Milov: Yes. All long-term contracts for supplying gas to Western European countries, the customers that Gazprom is focused on, have a connection to the ultimate price of oil on global markets. This means that if oil stays at its present level of about $40 to $50 a barrel, then in June, Germany should be paying less than $200 for 1,000 cubic meters of gas. And this means that Ukraine, Belarus, and the other post-Soviet countries should be paying considerably less.

That's why all this talk of $400 and the rhetoric about market prices has nothing to do with reality. It's pure politics. It's the use of some pretty harsh methods for the restoration of Russia's influence in the post-Soviet space -- and primarily in those countries that have in recent years been following a pro-Western course, pro-Western policies.