Russia-Ukraine gas conflict

[Olaf]

Yes there just come some "patriots" of Ukraine and started thier anoing rumbling about hitler, KGB, georgia, USSR and so on. Matter is simple PAY for gas and it will be no problems. Want to be part of Europe than european price will suit you fine and we wont object either . Pay your debt for gas ALREADY consumed and sign new contract that is all that needed from them but it seems too much to ask from "democratic" country .

If Russia is able to calculate it’s gas resources at Ukraine’s & EU border - How one can say Ukraine is stealing sometjing? ....Stealing means getting something “without payment”… Ukraine pays and always paid for gas to Russia and not only for gas in FULL… as it is impossible to get something from Kremlin for Free….

Ukraine is ready to pay a fair market price for Russian gas if Russia is ready to pay market prices for gas transportation to Europe 4$-$10 (not $1.7 as Russia pays now) and market price for its storage in Ukrainian gas facilities up to $25 (not $7 as Russia pays now).

[Max]

Many thanks, Olaf, for defense of my country… In reality this problem consists of very bold political and economical constituents. Political element generally comes to attempts of pressure both on Ukraine and EU, a sort of geopolitical game and muscle parade.

Economical element comes to factual bankruptcy of Gazprom which has around $ 50 billions of external debts and consistent lowering of its output.

These two constituents condition pathologic behavior of this dying Russian corporation.

[anton]

In March 2005 Gazprom informed Ukraine that gas price was to be raised to market rates. It insisted on a new contract in which Ukraine would be paying about $160 per 1,000 cubic meters (approximately $4.40 per million Btu).[citation needed] Ukraine's new government did agree to buy natural gas from Gazprom at higher prices in return for increased gas transit fees.[16][verification needed] Ukraine took steps to change the payments for the transition of Gazprom's gas to Europe from barter to cash. President of Ukraine Viktor Yushchenko agreed to some concessions, in which the price of gas would be gradually increased over time. He stated that Ukrainian industry would become unprofitable if the price of gas rose above $90. He also called for avoiding the politicization of the dispute, and expressed his confidence that the problem could be solved by economical rather than political means.

In May 2005 it was revealed that 7.8 bcm of gas which Gazprom had deposited in Ukrainian storage reservoirs during the previous winter had not been made available to the company. It remained unclear if the gas was missing, had disappeared due to technical problems, or had been stolen. This conflict was resolved in July 2005 by agreement between Gazprom, Naftohaz and RosUkrEnergo, according to which Naftohaz received 2.55 bcm of gas as partial settlement of the Russian gas transit over 2005 services and 5.25 bcm was sold by Gazprom to RosUkrEnergo who has to receive it from Naftohaz.

During the final three months of 2005, negotiations between Gazprom and Naftohaz failed to make progress. Gazprom demanded that from the beginning of 2006, Ukraine must pay a price of between $160–230 per 1,000 cubic meters unless a consortium company created from Gazprom and Naftohaz to operate Ukrainian gas transmission system would be established. Ukraine opposed the proposal and responded that it would pay this price for gas if it was phased in over a period of time and that the maximum it was prepared to pay in 2006 was $80 per 1,000 cubic meters.

In November, Ukraine proposed to pay for gas with weapon supplies as an one option. Some Ukrainian officials called for a review of the lease price Russia paid to Ukraine for keeping its Black Sea Fleet in Sevastopol, Crimea, while Russia resisted any discussions that might affect the conditions of the lease
On 8 December 2005, President of Russia Vladimir Putin noted in his speech that household consumers in Ukraine get gas for lower prices than do household consumers in Russia. He claimed that Ukraine has enough money in its budget to pay the market price. Putin also noted that Russia subsidized Ukraine on the gas matter by the amount of $1 billion a year from the Russian budget – money that Gazprom would have paid into the budget from its revenues. He also noted, that as 25 million Russians still live below the poverty line, such a load onto the Russian economy is more than questionable.

On 13 December 2005, Gazprom threatened that if an agreement about the new price is not reached before 1 January 2006 10:00 MSK, it would cut off supply of natural gas to Ukraine. As an only compromise about gas price Gazprom was ready to accept a creation of joint venture to own and operate Ukraine's gas transit pipelines. As Ukraine rejected this proposal, Gazprom stated that the new price would have to be 220–230 per 1,000 cubic meters (~ $6.35/mmBtu), claiming that such a price hike would reflect the gas price in the EU markets as also reflect the world market price for fuel oils. Ukraine claimed that such steps would violate the past contracts and brought up the possibility to resort to international arbitration.On 26 December 2005, Prime Minister of Ukraine Yuriy Yekhanurov confirmed that Ukraine had a contractual right for 15% of the Russian gas transiting to the European Union.This statement came largely in response to the Gazprom threat to resort to the Arbitration Institute of the Stockholm Chamber of Commerce should Ukraine engage in unlawful withdrawal of Russian transit gas. Earlier, Yekhanurov announced that Ukraine could refer the case to the Institute if the compromise is not reached.

On 15 December 2005, Ukraine offered Gasprom a joint-venture for selling gas in the internal Ukrainian market in exchange for gradual price increase up to 2010. This proposal was rejected by Gazprom.[26] On 29 December 2005 President Putin offered Ukraine a $3.6 billion loan to cover the increase in gas prices. President Yushchenko rejected the offer.In the last days of 2005, European countries, which had stayed out of the dispute until then, began urging Russia and Ukraine to find a compromise. On 31 December 2005, Russian president offered to postpone the price increase until April 2006 if Ukraine immediately agreed to the new prices. Ukraine, however, rejected the offer.
Andrei Illarionov, then Putin's economic adviser, was offered by the Russian government to explain the price hike and other issues of Russia–Ukraine relations as liberal economic policies, but refused to do so and resigned as this had nothing to do with liberal economic policies according to his beliefs


In November, 2008 Gazprom and Naftohaz signed a long-term contract according to which Ukraine will receive Russian natural gas directly from Gazprom and Naftohaz will be the sole importer of Russian natural gas. However, late November 2008 a new row between Gazprom and Ukraine occurred, when Gazprom wanted Ukraine to pay a $2.4 billion debt it says Ukraine has to the company before the new deal can come into effect. Prime Minister Tymoshenko said that not Ukraine but RosUkrEnergo has debt to Gazprom.[

Cutting off supply (January 2009)
On 23 December 2008, President Yushchenko said that more than $1 billion was paid by Ukraine to reduce its debt, while a part of the debt was restructured for January – February 2009. Gazprom denied that there is any agreement on debt restructuring. Gazprom's spokesman Sergei Kupriyanov said that, if Ukraine does not redeem its $1.67 billion debt for gas supplies and $450 million in fines, Gazprom remained committed to cut supplies to Ukraine on 1 January 2009. On 30 December 2008, Naftohaz said it paid $1.522 billion transferring money to RosUkrEnergo. RosUkrEnergo confirmed that it had received this payment but said that Naftohaz still owes $600 million in fines. Gazprom said it did not receive any payment because of the days off in the banking system.At the same time, Gazprom accused Naftohaz of blackmail, saying it had received a letter from Naftohaz threatening to confiscate gas supplied to the EU through Ukraine.The Ukrainians, changed theyre strategy from such threate to making promices that Ukraine will guarante the technical, secure, reliable and uninterrupted transportation of Russian natural gas to European countries through its territory.Negotiations between Gazprom and Naftohaz were interrupted on 31 December 2008.

On Vesti-24 TV, CEO of Gazprom Alexei Miller said he has an impression that there are political forces in Ukraine that those parties are very much interested in having a gas conflict between the two countries and he gave his assurances that Gazprom will continue delivering gas to Europe in full. Gazprom's spokesman Sergei Kupriaynov said on 1 January 2009 that Gazprom is ready to resume talks with Ukraine, but the Ukrainians have not been willing to negotiate. According to Kupriaynov, representatives of Naftohaz had received direct instructions not to sign any document. According to the Ukrainian President's representative for energy issues Bohdan Sokolovsky, the negotiations were interrupted at Gazprom's initiative.

Ukraine proposes that the price of natural gas for Ukraine will increase by $21.5 to $201 per 1,000 cubic meters, and the transit fee by $0.3 to $2 per 1,000 cubic meters pumped 100 kilometres (62 mi). Gazprom proposed that Naftohaz should buy its natural gas at $250 per 1,000 cubic meters starting from 2009.Prime Minister of Russia Vladimir Putin said that the $250 per 1000 cubic meters price was a "humanitarian gesture" to Ukraine considering that Russia buys gas from Central Asia for $340 and that the European price level is $500 per 1000 cubic meters. Later, Naftohaz said it was ready to pay $235. Gas deliveries for Ukraine were fully cut on 1 January 2009 at 10:00 MSK. The volume of gas pumped to Ukraine was reduced by 90 million cubic meters per day, while deliveries for transit to the EU continued at a volume of 300 million cubic meters per day.

In a joint statement by President Yushchenko and Prime Minister Tymoshenko, published on 1 January 2009, Ukraine guaranteed the uninterrupted transit of Russian natural gas to European countries and at the same time guaranteed that Ukrainian citizens will be provided with gas in full volume, claiming "Ukraine has enough gas in its storages, which will guarantee meeting of internal needs for a rather long period of time". The statement also noted that the Russians offer keeping the transit fee of $1.70 per 1,000 cubic meters over a distance of 100 kilometres (62 mi), which is according to the statement less than half of the average European rate. This transit rate makes it uneconomic to maintain the gas transportation system in a proper technical condition. At the same time Gazprom accused Naftohaz of blocking the activity of RosUkrEnergo while not allowing them to take up from underground storage tanks the gas that must be used for export operations. President Yushchenko sent a letter to President of the European Commission Jose Manuel Barroso proposing to him that the European Union should be involved in the settlement of the Ukrainian-Russian gas dispute. According to Interfax-Ukraine, this proposal was initiated by the EU.

A Ukrainian delegation including Fuel and Energy Minister Yuriy Prodan, Deputy Foreign Minister Konstantin Yeliseyev, President's representative for energy issues Sokolovsky, and Deputy Head of Naftohaz Vadym Chuprun visited Czech Republic as the EU Presidency and a number of the European Union other member states to hold consultations on natural gas issues in the first week of 2009.

On 2 January 2009 Gazprom accused Ukraine of stealing gas; these accusations were repeated later by Gazprom and Russian officials. "Starting from January 1 2009, Ukraine has been sabotaging the transit of gas to European countries and has practically declared a gas blockade of Europe," Gazprom's official statement on the gas crisis said. On 7 January 2009 Gazprom said that since the beginning of 2009, Ukraine has stolen more than 86 million cubic meters of gas. Russian President Dmitry Medvedev's spokesperson said that it is necessary for Ukrainian side to stop illegally taking Russian gas intended for European consumer According to Naftohaz it is not stealing gas but using this amount of gas for as a technical gas for compressor stations, in order to ensure the transit of Russian exports and diverting some gas to maintain pressure in the pipeline network.The amount of technical gas, which is needed, is 21 million cubic meters of gas per day. According to Heinz Hilbrecht of the European Commission Directorate-General for Transport and Energy, that responsibility for providing the technical gas falls to Ukraine, while according to Naftohaz this is the responsibility of Gazprom.According to Naftohaz a lack of technical agreement between Naftohaz and Gazprom will make it impossible to determine directions and technical volume for equally distributing transit gas among EU member countries. It also said that it diverts gas from its own reserves to try to maintain export supplies and it was not to blame for the fall in pressure.On 3 January 2009, the President's representative for energy issues Sokolovsky stated that problems for the EU would start in 10 days if Moscow failed to increase the supply. "If the Ukrainian pipeline does not receive the required gas volumes, the pressure in the pipes is going to fall. As result, there will be interruptions quite automatically, independent of people. The system could even have to shut down so that the pressure comes back."

The Czech EU Presidency on behalf of the EU made a statement calling for an urgent solution to the commercial dispute on gas supplies from the Russian Federation to Ukraine, and for an immediate resumption of full deliveries of gas to the EU member states. It stated that energy relations between the EU and its neighbours should be based on reliability and predictability and existing commitments to supply and transit have to be honoured under all circumstances. On 4 January 2009 Oleksander Shlapak, a senior Ukrainian presidential aide, told Reuters: "If Europe does not help us get out of this situation, then it can expect a more aggressive position from Russia on gas and other issues."

On 4 January 2009 both RosUkrEnergo (against Ukraine) and Gazprom (against Naftohaz) filed in lawsuits with the Stockholm Tribunal of the Arbitration Institute of the Stockholm Chamber of Commerce (SwedenUkraine has also filed in lawsuits there.According to Naftohaz, RosUkrEnergo owes the company $40 million for services on transportation of natural gas.

On 4 January 2009 Naftohaz declared that Gazprom had not paid Ukraine the due transit fee for transporting gas supplies to Europe (through Ukraine) since 1 January 2009. According to Gazprom, the price it pays for gas transit (through Ukraine) is based on a long-term contract which expires at the end of 2013 and which Naftohaz and Gazprom signed on 21 June 2002.

On 5 January 2009 Prime Minister Putin instructed Gazprom's Alexei Miller to cut supplies sent via Ukraine to Europe; Putin elaborated that the gas flow should be reduced by the amount Ukraine had allegedly taken since deliveries ended on 1 January 2008. Naftohaz denied the accusation and accused Gazprom of cutting the supplies sent via Ukraine from 262 million to 73.6 million cubic meters during the night between 5 and 6 January 2008.

At the same day on 5 January 2009 Kyiv's economic court decided to ban Naftohaz from transiting Russian gas in 2009 at a price of $1.60 per 1,600 cubic meters per 100 kilometers. The court decided to satisfy a ministry appeal declaring ineffective agreements on Russian gas transit via Ukraine that were to run until late 2010. Because the agreements were signed by the former deputy head of the Naftohaz board, Ihor Voronin, who was not empowered by the Cabinet of Ministers of Ukraine to do that. According to the statement, the consideration of the case in full is scheduled for January 9, 2009.

On 7 January 2009, all Russian gas flow to Europe through Ukraine was halted amid mutual accusations between the two parties. According to Prime Minister Putin, Ukraine closed the last transit pipeline on 7 January 2009 at 7 a.m., and when Russia saw that no gas was going to Western Europe, completely stopped the gas supply to Ukraine at 17:40 on the same day. According to Russian officials there was no longer any point delivering the gas because Kiev had shut down the pipelines. Russian President Dmitry Medvedev's spokesperson said that Ukraine had to immediately open transit. In its official statement Gazprom said that "Ukraine has been sabotaging the transit of gas to European countries and has practically declared a gas blockade of Europe."
Ukraine denied the charges and blamed Russia for the complete halt in gas flow to Europe. According to Ukrainian officials Russia was deliberately starving Europe of gas, they also noted that "Ukraine has no technical capability for stopping the pumping of Russian gas onto its territory, as all of the gas-(pumping) stations through which gas is supplied to Ukraine are located in Russia".In a telegram sent to the leadership of the European Union and heads of European states that consume Russian natural gas, President Yushchenko said that on 5 January 2009 262 million cubic meters of Russian gas was supplied, on 6 January 2009 at 9 a.m. 93 million cubic meters, and on 6 January 2009 at 11.30 a.m. 73 million cubic meters. The president also said that Russia plans to stop or considerably reduce Russian gas transit through Ukraine. "For your information, Ukraine consumes only the gas it produces itself and gas pumped into Ukrainian storage facilities, which has been paid for in full", he also said.

The EU declaration released on 8 January 2009 stated that so far both Russia and Ukraine have failed to show sufficient determination to solve the problem, which damages their credibility. The EU urged Russia and Ukraine to fulfil their respective obligations as supplier and transit country and immediately restore the supplies to the European market.

Negotiations between Gazprom and Naftohaz over a 2009 gas supply deal continued on 10 January 2009, but failed again. According to Oleh Dubyna, Gazprom demanded a price of $450 per 1,000 cubic metres of gas, which Ukraine could not accept. Prime Minister Putin commented that Russia's actions do not aim to worsen but rather to improve the situation in Ukraine, "to help Ukraine get rid of crooks and bribe-takers and make its economy more transparent."

[Max]

So funny. Putin is the biggest corruptioner of Russia, he is dictator of Russia actually. He represses hard own opposition and business but helps Ukraine. So sweet!

Russia stopped more then 100 gas wells. Specialist state a stopped well never can be restored again in full length. The daily loss of Russia since beginning of transit halt makes 120 millions $, overall loss is more then 800 millions $.

But there is secret behind the story: Russia has not enough of own gas and can’t execute obligations regarding EU consumers. Old gas fields are exhausted, Yamal will not give enough till 2015 and Turkmen gas is too expensive.

Instead of simple and hones declaring of default Gazprom simulates this inept “gas war” with Ukraine.

These is no gas in Russia and this is the real answer.

[Olaf]

In March 2005 Gazprom informed Ukraine that gas price was to be raised to market rates.

Prime Minister Putin commented that Russia's actions do not aim to worsen but rather to improve the situation in Ukraine, "to help Ukraine get rid of crooks and bribe-takers and make its economy more transparent."

Funny! Really funny! With KGB-Putin in Kremlin corruption got to extraorbital levels in Russia in lst 10 years and is even higher comparing to the times of Eltsin!

Mr.Firtash (Gazprom partner in Ukraine) & Gazprom own 100% of offshore company RusUkrEnergo who is selling gas in EU - other words stealing it from Russian budget and ordinary Russians.

Mr.Firtash, according to Kremlin's request is already imitating a "EU protest against Ukraine" in Hungary - by sibmitting a court claim on behalf this OFFSHOE-SWISS company.... Guess who will benefit in that?

[Olaf]

Russia is stealing natural resources (gas, oil, diamonds, wood) from native populations of Siberia.

Dozens of small north nations who are, in fact, the true owners of the land and resources that Russia sells to the West live poor and hard life. Life there is really hard not only because of the climate - there is nothing cheap there - just vodka - and alcoholism became a real problem for North nations of Russia.

But Moscow does not care about that - GAS and OIL is the most important thing - not native people of Sabiria! Its was always like that in 1950..the same in 2000....

[Vlsdislava]

I think your position is right.Policy of Ukraine really should not be supported. In fact the European Union and Russia in this case became hostages of Ukraine political chaos and its economic inconsistency

[Olaf]

I think your position is right.Policy of Ukraine really should not be supported. In fact the European Union and Russia in this case became hostages of Ukraine political chaos and its economic inconsistency

What internal politics or economics in Ukraine has to do with gas for EU or corruption in Russia? Nothing... You just say what Pooting is saying like a prayer on TV....

Ukraine is ready to pay a fair market price for Russian gas if Russia is ready to pay market prices for gas transportation to Europe 4$-$10 (not $1.7 as Russia pays now) and market price for its storage in Ukrainian gas facilities up to $25 (not $7 as Russia pays now).

So you can easily calculate how much it will cost for Russia if 120-180 billion cubic meters of gas will go via Ukraine to EU....

The funny thing is that even if Russia will be able to spend 20-40 billion dolalrs to build another 2 "gas streams" to EU transit via Ukraine won't go below 60%....

[manro1]

Ukraine does not deppend on gas from Russia as much as some would like to present it. Russia depend on Ukraine to transit the gas to EU ( 80% of russian gas has to go via Ukraine) Bulgaria depends 100% not Ukraine. Russia cut off 100% of gas( not just Ukranian portion ). EU paid Russia for gas that is no being delivered. The issue here is much bigger than gas. Russia also bases its warships in Ukraine and lease is to expire soon. That will be the show not be missed.

[manro1]

I think you are just retelling Putin's lies, my dear Russian999. Your "responsible" government has cut off gas to many Europeans. Just to keep your promisses? Even the former Soviet Uninon never did it during. even during the cold war.[/quote]

That was well said!! By cutting gas Russia hurt EU more than Ukraine.

[Max]

European Union and Russia in this case became hostages of Ukraine

In fact the European Union and Russia in this case became hostages of Ukraine…

At the moment Euro commission has enough proofs gas halt was made by Russia in one-sided order. This directly comes from data of Ukrainian dispatchers. Ukraine also received all experts from monitoring group and put them on pipes. Significantly, Russia still doesn’t want to see European expert on own stations that’s why they consciously delay signing of protocols.

Finally why not to ask Serbs which are usually Russia loyalists? In Kragujevac which is one of many frozen dying Serbian cities desperate people burn Russian flag.



Meanwhile Russian liberals show good sense of humor… There are almost no independent medias in Russia except few ones as radio station Echo of Moscow and newspaper New Gazette… local liberals already renamed main propagandist TV channel Vesti to “Hoebbels TV”, surname Putin to “Lilliputin” and turned ideological stamp “effective managers” to “defective managers”. Fidel stalwarts of regime got label of “medveputs”.

[russian999]

Okey!!!! What I got from this discussion is the sense, that prowestern and proukrainian opponents do have double snandarts! And Putin, brilliant devil politic, using it brilliantly! Proukrainian opponents just saing : " We dont care, how badly and immoral Ukraine behave. Ukrainian behaviors justified, because Ukraine is prowestern!" And Putin using this doublemindedness, in order to reveal - how immoral the west is ! I do not think, that Putin is good guy. But, I dont think, that west is moral either. So usually, if two bad guys at fight - I taking the side of more smart. Putin in this case much smarter, than Yushenko.
Anyway, Ukraine will go to knees, because they simple do not have money.

[manro1]

Okey!!!! What I got from this discussion is the sense, that prowestern and proukrainian opponents do have double snandarts! And Putin, brilliant devil politic, using it brilliantly! Proukrainian opponents just saing : " We dont care, how badly and immoral Ukraine behave. Ukrainian behaviors justified, because Ukraine is prowestern!" And Putin using this doublemindedness, in order to reveal - how immoral the west is ! I do not think, that Putin is good guy. But, I dont think, that west is moral either. So usually, if two bad guys at fight - I taking the side of more smart. Putin in this case much smarter, than Yushenko.
Anyway, Ukraine will go to knees, because they simple do not have money.

That is it because you just hate to se Ukraine independednt you want Ukraine on her knees. But the thing is your "smart" Liliputin did not hurt Ukraine , because Ukraine has gas , but EU. How smart is that.
PS: how much is Miller paying you to keep running negative PR campaine about "Bad Ukraine???"

[manro1]

Lets get some summaryWhat did "smart" liliputin gaine:
1) Serbia- always pro russian is not so prorussian anymore, because they are just freezing.
2) EU observers on russian soil, wow that was smart move for putin
3) usually pro russian eastern Ukraine is changing its mind
Do you still think he is smart give me some good that came out of this for Russia?

[Max]

prowestern and proukrainian opponents do have double snandarts!

And how about gas price of 130$ for Belarus, 280$ for Bulgaria and… 450$ for Ukraine? What kind of standards are these?

Let me go to core problem of negotiations if term “negotiation” is applied to Gazprom at all. Russia wants “market” price of 450$ which doesn’t exist anywhere in Europe for this year. Price for oil for this year is not more then 40$ for barrel so 200$ is maximum price for gas which can be imagined.

At the same time Gazproms insist Ukraine have to take from transit 1.6$ for 1000 square meters on 100 kilometres. The market level is 4-20$. So the maximal expensive gas and the maximal cheep transit. Cute.

To guarantee transit Ukraine has to buy at own expense 6-7 billions of square meters of so called “technological gas” which is being burned in compressors. The offered price is 450$.

Now it’s calculated transportation of Russian gas for Haftogas with such transit rates creates loss of more then $ billion (!). Accordingly to “defective managers” of Gazprom Ukraine has transport gas not only free but even at a billion loss.

Anyway, Ukraine will go to knees, because they simple do not have money.

Ukraine has not money for racketeers. Soon you will see Europe also will find money for gas gangsters. We are not so dependant on Russian gas as you think but 80% of it’s export comes through Ukraine. The outcomes are obvious.

[manro1]

Hey lets keep this discussion going. Where are you Russian999??
Give as what good did this conflict broght to russia?And why is your little putin sooooo smart?

[manro1]

Great post by Max. Can you explaine the standarts?

[Aleks_Kyiv]

v

Ukraine was first ..Who is next?

actually Georgia was first ...

[russian999]

Hey lets keep this discussion going. Where are you Russian999??
Give as what good did this conflict broght to russia?And why is your little putin sooooo smart?

First of all - I am not Putin fanat. I lived in the USA long enought to see - what kind of government should be.
But, I am realist! In politik most important is power. All this "democratic" staff you can use for internal relations within country. But, in international affairs most important power. So, Putin is doing, what he want. He gave blow to Georgia and USA. Many was screaming - that is russians end. But look - does russia came to the end?
Same with Ukraine! Now you screaming - Russia lost! But see - Russia allready put down Ukraine with transit monitor. But Ukraine still did not get gas for 201 $.Putin is very smart, but immoral. If Yushenko and Ukraine could be less smart, but more moral and responsible - I was first to go to fight against Putin and Gasprom. But for now Yushenko is just piece of sh.t.

[Max]

Great post by Max. Can you explaine the standarts?

Manro I must say the price creation procedure in Gazprom is extremely nontransparent and biased. Previously here was explanation of correlation between oil and gas prices. Gas price goes down together with oil price on stocks. As I understand there is 6 month lag though. And plus transportation costs which also are included in overall price.

So it looks like that: market price as indicated on stocks + 6 month lag + transportation costs.

Gazprom stated it’s ready to sell gas to Europe for 260-300$ this year. However I think this is only for first quarters then it will go down even more. For Germany price is 280$ and for Bulgaria 260$ including transportation. And this is very important moment because transit to Germany goes through Ukraine, Slovakia and Czech Republic. So if we take German price and subtract transit costs we will get around 230-235$ which is current Ukrainian proposal.

Now note there is no transit costs for Russian in Ukraine but they put their “special Kremlin price” of 450$.

I advice to read British press and exactly Roger Boyes article “Gazprom is not a market player, it’s a political weapon” on Times Online.

Some interesting quotes:

“Gazprom itself is neither good nor bad,” say the Russian authors Valeri Panyushkin and Mikhail Sygar. “It is like a Kalashnikov or a Colt that can be used either to intimidate or in defence. Its moral value depends on the intention of the person whose finger is on the trigger.” In other words, stop talking about Gazprom as a straightforward market player. It is a political weapon.”

And about previous politically motivated cut-offs:

“This is not about gas pricing. If it were, Moscow could have initiated serious talks about long-term supply contracts rather than engaging in annual price wrangles. The Kremlin disrupted supplies after the revolutions in Ukraine and Georgia. It lowers gas tariffs for friendly states such as Belarus and Armenia. In 2006, when a Polish energy company outbid Russian competitors for a stake in a Baltic oil refinery, the flow of Russian oil there stopped immediately. Because of “technical problems”.

Three days after the Czechs signed a missile defence deal with the US, Russian oil flow dropped by 40 per cent. Technical problems.”

Source: <!-- m --><a class="postlink" href="http://www.timesonline.co.uk/tol/news/world/europe/article5458245.ece">http://www.timesonline.co.uk/tol/news/w ... 458245.ece</a><!-- m -->

[Cyric Renner]

I believe Max is a Russophobe. I suppose he would have Russia export gas to the Ukraine for free or perhaps he believes all of Ukraine's explanations about not siphoning gas. According to Max, Urkaine is pure as Virgin wool in this dispute. The issue is simple. No contract, no gas, and as Russia cannot prevent Ukraine from siphoning off gas they had no alternative but to shut it down. As to the market price of natural gas, you are assuming that the price of oil will stay at $40.00 by spring to get to your $200 figure. It may or it may not. Aside from this, Ukraine has been getting a sweetheart deal over the years and could have had the price locked in for the year at 250 but due to their stupidity will now have to pay the full market price. They are of course free to buy their gas elsewhere, Norway perhaps ? They are a little short of funds these days though, do you suppose a gas supplier might extend them credit ? Rumour has it, that the IMF loan Urkaine received early has just about run out. Maybe by blackballing the EU, the goal was to get the EU to pay off their debts or secure a loan.

You know Ukraine use to take their discounted gas and sell it Europe at a profit ? Not only Europe, but they sold it to their own consumers at market price. Good work if you can get it. That's how Timoshenko became so wealthy over the years.

A final fly in the ointment. After the latest contact had been agreed to by both parties and executed by Russia, Urkaine sent the final agreement back with an Addendum. A hand written note on the contract by Timoshenko, which basicly invalidated the agreement. They most of known that this would be completely unacceptable to the Russians and likely infuriate them. It would aslo have the added bonus of further damaging the reputation of both Russia and Gazprom as now it appears that Russia is delaying the release of gas unnecessary. It is a dangerous game they are playing. Childish aswell. I believe the Urkraine leadership is run by kindergarden class.

[Max]

I believe Max is a Russophobe.

Cyric, if you are not Slav then I definitely know about Russia much more and this doesn't make me happy. I'm neither Russophobe nor Russophile. There is Russia and there is political regime of Medvedev-Putin. There are Russian which cut off the supply to Europe and there are Russians which sit in prisons for their political positions. These are completely different things.

I would say my opinion on 100% coincidences with British observers whom you should trust more I guess.

Ukraine is country under hard political and economical pressure of Russian regime. Meanwhile no one burns here Russian flags as desperate Serbs do.

Unlike the chilling homes of people in Serbia, Moldova, Bulagaria, Slovakia, 18 countries on the whole, your home must be very worm, right?

[SiD]

Hey max if you think that you can shield Ukraine with your fairy tales about "tyrany" in Russia or krocodile tears about people freezing you are wrong. First it is of no consiquence is Putin king or empereor, or liberal or whanewer to have gas you must PAY for it, do not like price? do not buy end of story. But if you have obligations to transit gas than you must, but Ukraine cant fulfill its obligations. One of "patriots" of Ukraine has already pointed that Russia loses more by stoping gas than Ukraine so it is obvius enough in whos interests is this whole mess. And becouse Ukraine is unstable country with how it is easy to guess unstable leadership it is nothing wrong for them to get other people freeze just to make Russia look bad becouse they need desperatly to distract population from internal problems and thier many political mistakes, not to mention to create a source of "all problems". Nothing new, creating some extarnal treat to blame it for all thier failures. So "do not blame mirror" as it is said, we do not want enyone to freeze but cant encourage thieves and blackmailing "bad people" .

[Max]

PAY for it, do not like price? do not buy end of story.

Perfect and convincing explanation of economical pressure. This is real Russian business language and style. OK. PAY our today’s 10$ of transit. Do not like price? Go end build Nordstream through aggressive Estonia and Poland waters.

But if you have obligations to transit gas than you must, but Ukraine cant fulfill its obligations.

Which obligations? Our transit work now is only good office regarding EU. At the moment there are not valid documents and contracts between Russia and Ukraine. There are few controversial agreement of 2003, 2006 and 2007 years which directly contradict each other. Russia refused to sign annual protocols which determine conditions, volumes, customs-tariff and regimes. Without this protocol Russian gas in Ukraine is only contraband.

Ukrainian court prohibited the transportation of gas for 1.6$, new contract is not signed so we actually have not any obligations regarding Russia. Russia is empty sound here. If we still pump the gas through the Ukraine only due to our good will.

Moreover Ukraine gives our own 2 millions of square meters of gas for Moldova and Bulgaria to prevent humanitarian catastrophe which may occur there because of “defective managers”.

[londoner]

WOW...Just got to know that gas from Ukraine comes to Romania & Bulgaria via Moldova where 100% of the pipelines and gas company itself belongs to.... Russian Gazprom....