MOSCOW (RIA Novosti) Dec.27 -- Gas prices have become the central issue in relations between post-Soviet countries. Ukraine, Georgia and Moldova, which recently set up the Union of Democratic Choice (UDC), a geopolitical alternative to Russia, are all consumers of Russian gas.
Until now Russia tried to preserve subsidies for its CIS partners, believing that this way it will keep them within its orbit. The dubious results of this policy became evident long ago.
Presidents of Ukraine Victor Yushchenko and of Georgia, Mikheil Saakashvili.
MOLDOVA and GEORGIA
Moldovan Communists began their rule with pro-Russian rhetoric and announcing plans to give the Russian language official status. Later, however, they appealed to the West seeking to abandon the so-called Kozak plan of the Transdnestr settlement, which, by the way, envisaged the official status for Russian.
In the past, Ukraine, Georgia and Moldova often maneuvered between Russia and the West, but now their geopolitical priorities have been determined clearly. The governments and most elites in these countries are openly pro-Western, although still mentioning the need to develop relations with Russia. In Georgia parliamentary opposition criticizes Russia even more harshly than the Mikhail Saakashvili government.
Observers were surprised to learn that Gazprom will raise the gas price from $63 to $110 per 1,000 cu m for Georgia and from $50 to $230 for Ukraine. The difference is too great to be accidental. The fact is that Russia is pursuing two aims at once. The first one is to raise Gazprom's earnings, as it is one of the biggest contributors to the country's budget. The other is to try to establish control over gas pipelines in the countries in question.
Russia is sending a signal that if it gets the pipeline, the gas price set now will remain stable for a long time. Apparently, there is a chance that at the next talks economic considerations will prevail over Tbilisi's political ambitions. If, however, this does not happen, Russia is likely to raise gas prices once again.
UKRAINE
The situation in Ukraine is different. The agreement on joint management of its gas transportation network was reached in 2002, when the parties announced the creation of a Russian-Ukrainian consortium, which was also to involve Germany. But it was not implemented under Kuchma, and was discarded under Yushchenko. It resulted in the shockingly tough stance adopted by Russia, which had been disappointed by usual protracted talks and decided to escalate the situation in order to force Ukraine to change its view on the consortium.
This means that Russia is not trying to settle the score with its geopolitical opponents, but is being very pragmatic (while differentiating between them), in an attempt to support its own economic expansion in former Soviet republics, using all available leverages.
Russian as official language to be abandoned in East Ukraine! Ukraine Raises $12 mln for President's Luxury Plane
Comment cross-posted from my diary :: EU Gas Import to be Cut? Ukraine Politics, Jobs, Fees, Pipeline & Ecology ◊ Oui @BooTrib
"Treason doth never prosper: what's the reason? For if it prosper, none dare call it treason."
▼ ▼ ▼ MY DIARY
Putin said Ukraine could receive Russian gas at existing lower prices until April and then switch to the four-fold increase being demanded by state-controlled gas giant Gazprom.
BRUSSELS (RTE News) Jan. 1, 2006 -- EU nations have started to feel the impact of Russia's decision to cut its gas supplies to Ukraine. Russia's state-run firm Gazprom cut Ukrainian supplies by a quarter after Kiev refused to sign a new contract seeking a 400% price increase.
Hungary and Poland were the first EU states to have supplies disrupted.
Read on ...
● Gazprom and Beltransgaz signed contract on supply and transit of gas in 2006 ● Cedric Brown, non-executive chairman at Eural Trans Gas
▼▼▼ READ MY DIARY ▼
For Europe I would go for Vladimir Putin and new German Chancellor Angela Merkel, a person for change in 2006 and leader of Europe's largest economy with 83 million people. Putin for impact of a President on a vast nation, Russia, and the former Soviet satellite states, envied by George Bush and his cronies in the U.S. Administration.
Political Scandal for 2006 ::
«« click on pic for story Jack Abramoff with lawyer before Congress, an example for many Republicans in the coming year.
Jack Abramoff with lawyer before Congress, an example for many Republicans in the coming year.
In The Hague a lot of fireworks displayed throughout the city center and suburbs. To avoid nasty crowd troubles, the city is now renowned for supporting neighborhood party coordination. To avoid large bonfires in city streets, the city council has given permission for large bonfires on the beach of the North Sea. Nasty rioting has been prevented in the last ten years!
Eurovision television has the traditional
Johann Strauss Waltz Concerts
Austria btw will have EU Presidency first six months and Putin's Russia will lead the G8 Nations on Finance and Economy. First item for discussion: democratic content of member nations and gas & oil distribution throughout the World - read U.S. and all Western energy consumers. I wonder whether there is any knowledge of assets to be found in the environment, climate and ecology.
Let 2006 be an EARTH YEAR :: have people unite globally to retake true democracy, whereby its leaders represent voters and not corporations.
● Eisenhower's Message to his country!
Listeners all around the world can experience the New Year's Concert live on the internet by way of Live-Stream beginning at 11:15 CET.
«« click on pic for map
Garmisch-Partenkirchen
The criteria for having the tiff now: Ukraine under anything but an expressly pro-Russian leadership gets to pay full market price.
Elsewhere, we see this exchange...
Which raises the issue of why Ukraine cannot void the contract using the same rationale asserted by the Russians when they cut the gas.
Then there is the matter of diversified supplies, which Ukraine enjoys, though much of Europe does not:
Now, a quick look at a map will point out that Turkmeni gas has to pass through the Russian network in order to get to Ukraine. A listing of Route options, existing and planned details that Turkmenistan uses the Central Asia-Center Pipeline system to connect to the Russian grid at Saratov and "is using this pipeline to export a total of 8.83 Tcf to Ukraine (via Russia) from 2002 to 2006, as well as smaller amounts to Russia."
The Russians, if inclined, could cut that supply off as well, though at the price of forcing a confrontation with the United States.
However, Russia and China are staunch allies. One of the now five year-old Shanghai Cooperation Organization's goals is to maintain strategic control over the energy reserves of Central Asia, as opposed to letting a non-Asian power (read: the United States or Europe) enjoy that role. Getting access to this energy is the main reason why India has been flirting with membership in SCO, and mending fences and making new friends -- with Pakistan and Iran, respectively. Have Keyboard. Will Travel. :)
Well, because there is no gas contract for 2006 between Naftogas and Gazrprom and this one is commercial contract, whereas fleet agreement is a package international treaty which includes Russia's recognition of Ukraine's borders.
There is no Turkmen gas for the first quarter of 2006 for Ukraine: this gas is all bought out by Gazprom.
I think that just about kills the optimistic scenario.
The Russians are going for the jugular, here. Have Keyboard. Will Travel. :)
Ukraine does not pay anywhere near commercial rates for gas. Current rate for Ukraine is 50$ 1,000 cubic metres of gas and 1.09$ for the transit of the same amount per 100 km. This price is real for all intents and purposes. Say, when Ukraine steals gas from the pipeline in order to sell to Romania for 250$, 50$ is what Ukraine owes Gazprom.
Proportional inrease to 250$ gas/5$ transit will make Ukraine transit fee way above max market rates (2.5$).
Not true; residential rates used to be around 40$, industrial around 60$ (that's why 50$ above is real). Gas bill for appartment can be around 1$ for unmetered appartments.
For Gazprom main issues are that gas and transit fees are tied and the fact that Ukraine can steal gas at any point and resell for 250$.
The retail and industrial prices you mention are the official ones, not the real ones that you need to pay if you actually want gas (I am talking about large users like local distributors). The intermediaries get good revenues form the final consumers - the question is who they pay it to, or who they share it with.
See my new story on the front page. In the long run, we're all dead. John Maynard Keynes
How different are nominal prices from local distributor's prices? They should be pretty much the same. Gas is dirt cheap for end users, otherwise Ukraine would not be #6 gas user in the world with #32 economy.
So "commercial" terms would mean oil-indexed prices for the gas, and "what the market will bear" for transit fees. Ukraine, having absolute control over Russian exports, can capture the rent and set whatever transit price it wants. The current status quo (25 bcm/y of gas vs transit rights) is a great deal for Russia - this is not what this dispute is about. In the long run, we're all dead. John Maynard Keynes
every time Ukraine steals gas, that is the amount Gazprom gets back; current ratio is tilted into Ukraine's favour; Gazprom transit fees for Turkmen gas can be made the same as Ukraine's fees for Gazprom gas; that is the amount Ukraine will pay for the gas in the first quater of 2006 and after 2007, when Turkmen gas is being bought by Gazprom.
Ukraine can not charge whatever it wants for the transit (well, no more than Russia can charge for the gas, being the only supplier), and one of the reasons being that Turkmen gas goes through Russian pipeline.
As for the price, Gazprom is talking about 12 bcm/y, so it does not seem to think that the price is great.
(Obviously, there is gas physically coming from Turkmenistan, but it is bought dirt cheap as Turkmenistan has no other option - the Turkmenbashi doesn't care as he is part of this scam, obviously, and has few people he needs to share with) In the long run, we're all dead. John Maynard Keynes
The only way to "capture value" is to buy for 50$ and resell for 250$ and this done by Naftogaz/Ukraine.
Gazprom suggest market rate which will make this impossible, Yushenko tries to keep this arrangement.
And a $1.5 billion difference, which an above comment (written by you, I believe) argued the Ukrainians should just pay, may not sound like a lot of money, if you live in the US, Western Europe or Russia, but, when your GDP is only about $300 billion, it's a lot of money. It's easy to advocate coughing up the money when your country has it or can easily afford to borrow it.
The entire issue seems to be more political than economic. Former Soviet Republics who have agreed to play nice with Moscow are getting gas for less than half the price being demanded from Ukraine -- even less than the former rate in Ukraine for Belarus. You're seriously arguing that this has nothing to do with politics? WHEEEEEEEEEEEEEEEEEEEEE!
The fact that Ukraine is poor (real or perceived) does not mean it can steal whatever gas it wants.
Russia's government already offered a loan, which was rejected. Gazprom also offered lower gas prices for the share in gas pipelines and Ukraine was not interested. So the problem is not with money.
Belarus never had problems with theft, and Gazprom has a share in pipeline. From Gazprom point of view, low gas prices is a payment for the pipeline ownership.
Thanks! Mikhail from SF
Vladimir from the good-old KGB school, doesn't have a single wrinkle in his face out of place. Off camera he must laugh his ass off when he fooled the bunch of diplomats, press and media once again. Putin is returning all gas and oil assets to centralized government within the Kremlin. Taking back from the rich and returning to the poor old party leaders.
The pricing issue of gas transport through the Ukraine is payback for Orange Revolt, support for the Russian Eastern Ukraine population and a stark warning to other satellite states. Dictator Karimov ultimately feels more comfortable under Russia's umbrella in Uzbekistan, and Putin looks for further consolidation of his reach and power in the Central Asian and Caspian Sea states.
Kremlin is not about PR or diplomacy, prefer to use available power to handle a crisis. The former Soviet satellite states recognize the tactics and offer countermeasures from the democratic West and public or media opinion.
Remember the photos of revolt?
No, no! Not Washington and Bush, in this article George Bush turns the table on friend Vladimir Putin.
The trial of oil billionaire Mikhail Khodorkovsky has evolved into a test watched globally, of the Kremlin's attitude towards an independent judiciary and private property.
Mr Bush said he had raised the matter with President Vladimir Putin at a recent meeting. Mr Bush said he told Mr Putin: "Here, you're innocent until proven guilty and it appeared to us, at least people in my administration, that it looked like he had been judged guilty prior to having a fair trial." He added: "We've expressed our concern about the appeal. We're watching the ongoing case."
The billionaire, whose wealth has shrunk since his arrest from $15.2bn (£8.4bn) to $2.2bn as the Kremlin seized and sold off his oil company Yukos, looked straight ahead while listening to the sentence.
He said in court: "This is a monument to Basmanny justice," a reference to the Moscow court that turned down his bail applications and to accusations that the courts are an extension of the executive.
http://www.eurotrib.com/story/2006/1/2/294/68796#6 In the long run, we're all dead. John Maynard Keynes
MOSCOW (Energy Bulletin) Nov. 8, 2005 -- The Russian gas monopoly "Gazprom" is considering raising prices for Ukraine three-fold to 170-180 dollars per 1000 cubic meters in contrast to the current price of 50 dollars per 1000 cubic meters. Turkmenistan is also considering raising the natural gas price for Ukraine.
Turkmenistan is discontented with the current level of payments and wants Kiyiv [Ukraine] to pay full price for imported gas. After the last visit of Ukrainian Prime Minister Jurij Jehanurov there were even rumours that Ashgabat, the biggest supplier of natural gas to Ukraine (50%), will stop gas supplies to Ukraine in 2006.
Turkmenistan has an opportunity to feed South Asia's growing gas demand: reserves are huge but these await certification; Turkmenistan's Karakum Desert is rich with gas fields that lie beneath the sand.
The simultaneous price hikes by Russia and Ashgabat allow us to conclude that their actions are fully or partly coordinated. The situation is aggravated by a bilateral agreement between Gazprom and Uzbekistan signed in late September about the use of the transit capacities of Uzbek gas pipelines (50 billion m3 of natural gas per year). The agreement means that Ukraine is fully cut off from the Turkmenistan natural gas supply. Gazprom and the Kremlin can celebrate their triumph over Ukraine.
● Gazprom Agreement Azerbaijan - 2004 ● Caspian Sea Region: USAID report 2002-2004 (pdf file)
The reduction stabilised at 33%. However, due to mild weather, there are no problems as yet. *Traitor*, n. A benighted individual who perceives an illusory distinction between serving his nation and abetting the criminals who govern it.
GDF apparently says that they are currently losing 20% of their Russian supplies, which represents 4% of their total supplies. In the long run, we're all dead. John Maynard Keynes
Here is a combined graph for all four feed-in types in Hungary - the red is the Ukrainian line, the yellow ther Austrian, green is what comes from underground storage facilities, blue is own production.
*Traitor*, n. A benighted individual who perceives an illusory distinction between serving his nation and abetting the criminals who govern it.
I meant Slovakia... *Traitor*, n. A benighted individual who perceives an illusory distinction between serving his nation and abetting the criminals who govern it.
To separate myself from Dubya (eek!!!), I doubt he knew any of this before. *Traitor*, n. A benighted individual who perceives an illusory distinction between serving his nation and abetting the criminals who govern it.
France, Italy, Germany, Hungary and Poland were among those reporting falling volumes.
Hungary says normal gas supplies have now been restored
Russia says it will pump more gas to Europe after various countries said their supplies had fallen by up to 40% after Moscow cut Ukraine's provision.
Russia said it was sending an extra 95 million cubic metres a day, to make up for gas "stolen" by Ukraine.
Ukraine denies it has siphoned off $25m (£15m) worth of gas from a pipeline crossing its territory after Russia cut off its supply in a price dispute.
My diary @BooMan's :: ● Russia Vows to End Gas Shortage to Europe
Russian gas cuts - why there is no need to worry
Jerome, I've been lurking at DailyKos for the past 1.5 years and never posted a comment there. I've been lurking here at Eurotrib since its inception as well. This diary, however, has finally forced me to post a response ...
According to your point of view, Putin is trying to punish Ukraine for leaning closer to the West. Specifically, you seem to be saying that he is retaliating in response to the Orange "revolution" - which was an American-sponsored coup, by the way, which has done nothing but harm the Ukrainian economy and people. We can put this aside, however, because it has nothing to do with the current "crisis".
The real reason for Putin demanding that Ukraine pay market price for Russia's natural gas is that the Russian people are sick and tired of subsidizing countries that continually bad-mouth her in public, yet are more than happy to buy her gas for $50/ 1000 cm and resell it to Hungary, Romania, and Moldavia for $250. Why should Russia subsidize Ukrainian industries and companies, like steel maker Kryvorizhstal, that are in direct competition with Russian industry?
[Minor edits and links added - Oui]
BBC News June 14, 2004 -- A company owned by the son-in-law of Ukraine's President Leonid Kuchma has won a tender to buy Kryvorizhstal, the country's biggest steel plant. Viktor Pinchuk, who has interests in steel, energy and media, won the bid in partnership with Rinat Akhmetov, Ukraine's richest man. Their 4.3bn-hryvnia (£430m; $780m) bid won despite competition from Russian, US and European steel firms. The tender has aroused vigorous protest in Ukraine and abroad.
● Analysis of Orange Revolt
Gazprom to Cover European Exports 'Stolen by Ukraine' Gazprom Deputy Chief Executive Alexander Medvedev said at the press conference: "... gas supplies to Europe will be restored in full, in accordance to their contract. However, the situation in which Ukraine continues to steal gas and we continue to supply European customers can't continue indefinitely."
Turkmen Gas
Gazprom will buy 30 billion m³ of Turkmen gas this year, including 15 billion m³ in the first quarter, which means there is no room for Ukrainian gas in Turkmenistan's pipelines, the company said in an e-mailed statement yesterday.
Turkmen President Saparmurat Niyazov confirmed his country will sell Ukraine 40 billion m³ this year, according to a statement on Ukrainian President Viktor Yushchenko's Web site, following a telephone conversation between the leaders.
«« click on pic to enlarge
● BBC Video Report - Deputy Chairman of Gazprom ● WTO official Pascal Lami -- Russia and Ukraine should pay market prices
European press today
Tomorrow, a meeting has been set for the EU Energy Commission with all EU officials. Representatives from Russia, Ukraine and Gazprom will also attend the meeting.
European Commission Press Info
The European Union is pursuing a carefully neutral line in the spat over gas prices between Russia and Ukraine, refusing to blame either party. An emergency meeting of energy officials is set for 4 January, but the EU insists there is no supply crisis.
Brussels (RFE/RL) Jan. 3 -- The Russian-Ukrainian crisis has brought several responses from the European Union.
The European Commission today urged Russia and Ukraine to return to the negotatiating table in their dispute over gas prices. This came just hours before Russian and Ukrainian gas officials were reportedly due to meet later in the day to discuss their pricing dispute, which led Moscow to cut gas supplies to Ukraine.
Also in response to the crisis, the European Commission has called an emergency meeting of EU energy experts and industry representatives in Brussels on 4 January to assess the impact of the spat.
Russia's attempt on 1 January to cut gas deliveries to Ukraine led to considerable drops in gas supplies across Europe that depend on the same pipelines. Although it accuses Ukraine of siphoning off gas, Russia has now restored gas levels in Ukrainian pipelines to nearly precrisis levels.
European Commission spokesman Johannes Laitenberger said further talks between Moscow and Kyiv are the best way of overcoming the crisis. "At this point in time the commission urges the parties to the dispute to get back to the table of negotiations," he said. "The best possible solution would of course be for the parties to the dispute to solve the conflict between themselves. If that proved not to be possible, nothing is ruled out, nothing is ruled in [in terms of EU reaction]."
MOSCOW (Reuters) - Russia and Ukraine reached a face-saving deal on Wednesday in a bitter gas dispute which hit supplies to Europe for two days and cast doubt on Moscow's reliability as a secure supply source.
"We have reached a final agreement," Gazprom Chief Executive Alexei Miller told a news conference in Moscow after crisis talks with Ukrainian officials.
"This agreement will ensure stable supplies to Europe."
Details were sketchy, but Miller said the five-year deal was effective from January 1 and based on a price of $230 per 1,000 cubic meters of gas. That is a huge rise from the $50 Ukraine had been paying -- a holdover from subsidized Soviet-era prices.
But the head of Ukraine's Naftogaz state energy firm, Oleksiy Ivchenko, told the same news conference that -- after mixing in supplies from Turkmenistan and Kazakhstan -- Kiev would actually pay $95 per 1,000 cubic meters at its border.
Analysis - read on ...
Gazprom Cuts Gas Supplies to Ukraine ¶ Hungary-Poland Gas Disrupted ¶ Pipeline & Ecology Fri Dec 30th, 2005 at 08:00:14 AM PST
Gazprom Cuts Gas Supplies to Ukraine ¶ Hungary-Poland Gas Disrupted ¶ Pipeline & Ecology
