Russians stop gas shipments to Europe

[Dr Strangelove]

Obviously, $250 is still well above market. Until demonstrated otherwise, I'll continue to believe that Ukraine is holding to the more reasonable position, at least as far as the headline price goes (don't know about the transit fee). $179 seems like a good bid price that is easily justifiable.

But what's the price in Europe? Is the rest of Europe paying $450?

[DanS]

I don't know that they are paying $450. But even if they are, they may have signed long-term supply deals with Russia that specified this price. Ukraine shouldn't have to pay the price set when the market was high, given that apparently its supply deal is short-term.

[Dr Strangelove]

One source I found said that the UK was currently paying $9.79 per million BTU. I believe that translates into about $9.70 per 1000 ft^3 or about $350 per 1000 m^3. ( 35.7 f^3 = 1 m^3 ) Prices in central Europe might be higher.

[notyoueither]

I'm writing this from a middle of a snowstorm. My place is warm because it is connected to a central city heating system (US guys should look that up, they don't have it in the US!). But hundreds of people here (Croatia) depend on gas.

You mean like steam that is piped to various buildings?

[snoopy369]

I believe that is correct, yes. Central radiators, give or take.

For example:

http://earth2tech.com/2008/10/09/a-neighborly-approach-to-heating-gains-steam/

[Dinner]

About half the pre-WW2 military bases in the US have central steam heating systems. NAS North Island has such a steam heating system and they even sell some of the excess steam to the older civilian buildings in Coronado (example city hall). Most new buildings opt for electrical or natural gas heating instead of steam heating but lots of older buildings on the east coast especially in NYC still use central steam heating where their is one boiler and the building owner sets the temperature for the entire building.

[Dinner]

I believe that is correct, yes. Central radiators, give or take.

For example:
http://earth2tech.com/2008/10/09/a-n...g-gains-steam/

It basically a 19th century technology which lost favor because everyone wanted to set their own temperatures. Honestly electricly powered heaters (popular in SoCal) are better especially if the power source for the electric heaters are hydro or nuclear power. That produces a very low carbon foot print but still lets everyone make their own choices.

[Colonâ„¢]

Obviously, $250 is still well above market. Until demonstrated otherwise, I'll continue to believe that Ukraine is holding to the more reasonable position, at least as far as the headline price goes (don't know about the transit fee). $179 seems like a good bid price that is easily justifiable.

Hmmm...

http://www.businessweek.com/blogs/russia_oil_politics/archives/2009/01/russia-ukraine.html

"In Europe, natural gas prices follow oil, and Russia is clearly of the consensus view that oil will average somewhere in the neighborhood of $60 a barrel this year. That corresponds to a natural gas price of about $350 per 1,000 cubic meters. (Here’s the loose formula to get the natural gas price: divide the oil price by six, then multiply the result by 35.3).

...

Ukraine, however, has embraced oil’s most recent price band. It’s arguing that oil will average $40 a barrel this year, or $235 per 1,000 cubic meters of natural gas. That’s precisely what Ukraine has counter-offered to Gazprom."

[Dr Strangelove]

What puzzles me then is if Russia's prices are so far above world market prices why weren't the nations of central and eastern Europe scrambling for supplies from elsewhere until this current crisis? Ships carry natural gas too.

I'm waiting for one of those LNG tankers to have an accident. I'll bet it will be spectacular.

[onodera]

Most new buildings opt for electrical or natural gas heating instead of steam heating but lots of older buildings on the east coast especially in NYC still use central steam heating where their is one boiler and the building owner sets the temperature for the entire building.

That's not central heating. Central heating is when there is one huge boiler system for the whole city block.

[Krill]

What puzzles me then is if Russia's prices are so far above world market prices why weren't the nations of central and eastern Europe scrambling for supplies from elsewhere until this current crisis? Ships carry natural gas too.

I'm waiting for one of those LNG tankers to have an accident. I'll bet it will be spectacular.

Didn't the Russians demonstrate a father of all bombs? If a tank had a massive leak in port you could be look at the destruction of the half the city, if all of the gas got to mix with oxygen before being ignited...

[Colonâ„¢]

What puzzles me then is if Russia's prices are so far above world market prices why weren't the nations of central and eastern Europe scrambling for supplies from elsewhere until this current crisis? Ships carry natural gas too.

I'm waiting for one of those LNG tankers to have an accident. I'll bet it will be spectacular.

I'm not sure where we established that Russia's asking prices are far above market. It's also a bit curious to speak of "market prices" since Russia itself is one of the main setters of it.

[Dinner]

Just admit it. You're getting screwed.

[VetLegion]

Oerdin, what I was referring to is this:

http://en.wikipedia.org/wiki/District_heating

Basically you have one plant producing heat (for space and water heating) for tens of thousands of people. This heat is piped all over the city. My city has two or three such plants. They also produce electricity which makes them very efficient.

[VetLegion]

What puzzles me then is if Russia's prices are so far above world market prices why weren't the nations of central and eastern Europe scrambling for supplies from elsewhere until this current crisis? Ships carry natural gas too.

The world market for natural gas is not nearly as developed as the one for oil. Gas is theoretically as fungible but in practice there are obstacles. For example tankers for it are very expensive and fewer. LNG terminals for offloading and storing the gas are tremendously expensive. Many supply contracts are long term so there is not much gas available on the market. Croatia learned that these days as we scrambled to buy some from producers in North Africa. It's virtually impossible.