Ukraine energy crisis

[Serb]

Looks like it's over.

Don't have English link about resolution of the crisis, yet. But I can assure you - we won.

[alva]

I think you both lost...

[Serb]

Hey, Oerdin, below is some info for you from an American source.
Do you trust to the Washington Times?

http://www.washtimes.com/op-ed/20051228-095159-1239r.htm

The other gas crisis
TODAY'S COLUMNIST
By M. Ron Wahid
December 29, 2005

Driving to New York City this holiday season? What if you couldn't drive through New Jersey because that state and New York had been unable to agree on the tolls at the Lincoln Tunnel? That's not a bad analogy for what is happening right now, as winter sets in, between Russia and Ukraine in their dispute over the pipeline bringing Russian gas to Europe and to Ukraine itself.
The pipeline passes through Ukraine, but Ukraine has refused to agree to a 2006 rates schedule, even with the New Year fast approaching. This commercial brinksmanship helps no one and has already hurt Ukraine.
It doesn't make sense as a negotiating tactic on a Manhattan transit strike; it makes even less sense for two developing nations struggling to achieve economic growth and attract Western investment after 70 years of Soviet Communism.
Russia holds the world's largest gas reserves and is the second-largest oil exporter. Up to 80 percent of Russia's gas exports to Western Europe pass through Ukraine, and this accounts for about 25 percent of Western Europe's supply of natural gas.
The two sides had originally agreed to sign an agreement by July 1 on gas rates for 2006. But Ukraine's strategy was evidently to delay. Aleksey Ivchenko, head of the Ukrainian gas company Naftogaz, was reported by Kommersant Ukraina in October to have said, "We shall wait until the end of the year and then if Gazprom will not sign with us the agreement on the transit of gas, we shall begin technical seizure [of the pipeline]."
The Russian company Gazprom's original proposal was for a gradual gas price increase, leading to eventual full market rates for its Western European customers. With soaring world prices, however, that rate is no longer economical. Ukraine's delays, therefore, did nothing but raise the cost of gas to Ukrainian customers. Ukraine's refusal to negotiate a fair agreement in the summer has seriously hurt its economy and now raises the specter of an energy crisis in Europe this winter if the parties cannot agree on a rate for transit of gas.
More generally, this kind of attitude hurts Ukraine's reputation in its efforts to attract Western investment. No foreign investor wants to worry about whether it can protect its investment in the event of adverse commercial conditions.
Consider the issue also from the perspective of international politics. If Ukraine continues to balk at reasonable terms for passage of gas, the logical alternative is a pipeline through Belarus, Europe's last dictatorship. Is this truly in Western interests? Further east, recently, Kazakhstan inaugurated a new oil pipeline to China, a rapidly expanding market. So it is in the interests of all countries in Europe, as well as the United States, to keep oil and gas flowing smoothly on commercial terms to the West.
Commerce in hydrocarbons cannot easily continue if one country uses the simple fact of geography to exact exorbitant fees from users of the pipeline in other countries. The United States solved this problem in 1787 through the Commerce Clause, prohibiting any one state from interfering with commerce between the states. Ukraine has a clear right to a toll for the passage of gas across its territory; in recent years, Ukraine has essentially agreed to barter access to its territory for below-market prices for gas. That's a logical outcome. But gaming the system will tempt other countries to do the same, leading to higher oil and gas prices for all consumers.
Ukraine's policies will raise prices for all, slowing down economies and discouraging the further Russian investments in energy which will develop Russian reserves for all consumers, including Americans, in the quickest, safest, and most environmentally sound manner.
Energy prices are high enough right now without adding excessively high fees. Energy is like other commodities: If prices rise too high thanks to punitive tariffs, then consumers will seek alternative sources of supply or reduce consumption. How does either strategy benefit Ukraine? Does Ukraine really want an economic slowdown in Europe or to oppose legitimate Russian commerce? And how does this stance help Ukraine's aspirations to join the European Union? Should it not instead seek to ease commercial transactions between Russia and the EU? If Ukraine wishes to be seen as a "bridge to Europe," it should not make using the bridge difficult for either side.
A year ago, the West celebrated the Orange Revolution and Ukraine's re-emergence as a democratic state. This time, however, those who believe in free markets and freedom of commerce must side with Russia.

M. Ron Wahid is president of Washington-based RJI Capital Corp., which focuses on international energy transactions.

[Vince278]

Don't see any problem here. Russia is free to sell their gas to anyone who will buy and everyone else is free not to buy it.
(By the way, where is the Russian gas coming from? )

[Serb]

From Russia, of course.

[Datajack Franit]

I agree with Serb.

Maybe 200$ less than market price was ok for a friendly country. Nowaday Ukraine wants to be a primadonna and stand up against the evil russian oppressor? Fine. But don't expect them to subside you.

[Serb]

Exactly

[DRoseDARs]

http://news.bbc.co.uk/2/hi/europe/4579648.stm

Summary: Ukraine pays $95 per 1,000 cubic metres.

Ukraine and Russia reach gas deal
Central European Gas Hub in Baumgarten near the Austrian-Slovakian border
Russia says gas supplies to Europe have now been fully restored
Russian and Ukrainian officials have reached an agreement in their dispute over the price of gas.

Under the deal, Ukraine will buy a mixture of Russian and Central Asian gas for $95 per 1,000 cubic metres.

Russia switched off the gas supply to Ukraine on 1 January after Kiev refused to agree to a price rise taking the cost of Russian gas from $50 to $230.

The row led to a disruption of imports across Europe, but correspondents say the threat to supplies is now over.

"We have reached a final agreement. It is successful for Gazprom and we are satisfied," the head of Russian energy company Gazprom told reporters in Moscow.

"This agreement will ensure stable supplies to Europe."

The news came as European Union officials held emergency talks on how to ensure the security of gas supplies.

Russia supplies about a quarter of Western Europe's needs, but this proportion is due to rise dramatically in future.

'Face-saving deal'

Delegates from Ukrainian state energy company Naftogaz held midnight talks with Gazprom executives to try to resolve the dispute.


Europe's gas pipeline network

Enlarge Map

Under the compromise, Ukraine will buy gas from the Russian-Swiss trading company, Rosukrenergo.

Gazprom will sell gas to Rosukrenergo company for $230 for 1,000 cubic metres from 1 January, but the company will also supply Ukraine with much cheaper gas from Turkmenistan.

The overall price Ukraine will pay be $95 per thousand cubic metres. It will also get paid 47% more for transporting Russian gas to Europe.

Previously, Ukraine bought gas from Turkmenistan at a price of $50 per 1,000 cubic metres.

Analysts say the deal is a face-saving compromise for the two sides.

"It's designed so that both sides can say they're paying - and being paid - the price they wanted," Stephen O'Sullivan from Moscow investment bank UFG told the BBC News website.

Stealing claims

The Ukrainian foreign ministry said the authoritaties were fully satisfied with the deal and it was a clear victory for the country.

Russia's decision to cut gas exports to Ukraine had caused dismay across Europe and spurred international efforts to mediate.

Gazprom had accused Kiev of stealing gas intended for Europe.

Kiev denied any wrongdoing and said it was being punished for its attempts to become more independent from Moscow and develop stronger ties with the West.

[Vince278]

Originally posted by Serb
From Russia, of course.

I was implying the gas was coming from eating beets and cabbage but I'm actually glad you didn't take the bait.

On the topic, I agree with Datajack.

[Datajack Franit]

Ohh

[Serb]

Originally posted by DRoseDARs

http://news.bbc.co.uk/2/hi/europe/4579648.stm

Summary: Ukraine pays $95 per 1,000 cubic metres.

Another summary: Russia sells $230 per 1,000 cubic metres.

As head of Gazprom said: "The negotiations were sucessfull for Gazprom. We are fully satisfied with achieved resoults".

Ukraine admited gas its thievery. The amount of gas stolen during January 1-4 will be paid by Ukraine for a price defined in the new contract.

But, I'm sure it's not the end of the story. Something tells me soon we'll hear more fascinating news.

[Datajack Franit]

I think I will be back having internet sex dates right now

[Combat Ingrid]

Originally posted by Serb
The problem we have now is not a hostage situaton where Russia is a hostage taker, but a hostage situation when Ukraine is hostage taker, because 80% of Russian gas goes to European consumers through Ukranian territory.

So this whole mess is just Russia struggling to free itself from Ukraine's imperialistic tendencies?

[Serb]

Nope, this whole mess is just Russia struggling to free itself from Ukraine's hostage tacking tendencies.

Gotta run watching 2nd period of the semi-finals. Can't miss how Russia burying USA. We'll continue after the game.

[Serb]

BTW, about unfair price for Byelorussia:

The current dispute between Moscow and Kiev is so bitter because it has ruptured a post- Soviet consensus that in order to get low energy bills, the newly independent states must hand Russia control of a chunk of their economy. In the Kremlin's view, countries that choose to opt out of this unspoken agreement deserve all they get: in this case, a shortage of gas to feed Ukraine's metals industry.

Belarus played the game last week when it ceded its Yamal pipeline carrying gas to European clients to the Russian monopoly Gazprom. As a result, Belarus will get its delivery of Siberian gas at $47 (£27) per 1,000 cubic metres compared with the $230 Gazprom is demanding from Ukraine. Even Georgia, with its anti-Kremlin president, Mikhail Saakashvili, has been careful to avoid slamming the door on Russian participation. Its price this year is $110.

http://www.guardian.co.uk/russia/article/0,2763,1676948,00.html

Have a nice day.