ricky Wrote:Olaf, would you ever sell something to a country at a price two or three times lower than the market price? Especially if your relations with this country have deteriorated recently. If Western countries think Russia should sell gas to Ukraine at $200 instead of $400, the market price, why wouldn't they themselves sell gas back to Ukraine at this price? I just don't understand why you think _Russia_ should give charity to Ukraine...
Price for gas depends on cost of other energy resources, especially oil price. Desire of Kremlin to sell Russian gas at high world market and European prices is legal and fair but… The price formula for Russian gas until now remains a “Kremlin’s secret”. However it is more "a bogus secret" because with application of the international standards, GAAP formulas and price approach used by gas traders at spot American market it can be easily calculated - the market price of gas is correlated to the market price of oil.
Few years ago, during the Russia-Ukraine gas dispute in 2006, Putin clearly stated that price for gas depends on the Amsterdam Stock prices for crude oil, black oil, coal etc.
However, a conflict of 2009 is different and very strange… it’s more about politics. Moscow does not take into account market reality and except of strong desire to sell gas at high price, current price for Russian gas is not backed-up with anything, except political ambitions of the Kremlin. It’s very surprising to hear the prices Moscow offers to Ukraine - $250, $350, $400, $418, $450, $417 ….
PRICE CORRELATION - RUSSIAN GAS & WORDL MARKET OIL PRICES
1996 - OIL$ 17 - GAS $ 90
1999- OIL $ 10 - GAS $ 60
2000 - OIL$ 26 - GAS $ 75
2001 - OIL$ 30 - GAS $ 130
2002 - OIL$ 19 - GAS $ 100
2003 - OIL$ 25 - GAS $ 110
2004 - OIL$ 30 - GAS $ 125
2005 - OIL$ 50 - GAS $ 160
2006 - OIL$ 80 - GAS $ 200
2008 - OIL$ 100 - GAS $ 300
2009 - WORLD OIL $40-50 - RUSSIAN GAS 450 ????!!!!
The price for gas should be MARKET PRICE, not "Kremlin price" nor "Gazprom price" nor "Putin price" … as we see it now.