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Natural Gas Dilemma in Ukraine

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.

    "It is difficult to offer any proof but one gets the impression that Ukraine would keep dragging its feet until it fully explores two possibilities and makes up its mind about either or both:
    (1) Prospects of laying a pipeline between Iran and Ukraine and buying most of its gas requirements from Iran, and
    (2) Wait and see whether the United States can revive the long-shelved Trans-Caspian pipeline that would run parallel to the BTC."

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)

"Treason doth never prosper: what's the reason?
For if it prosper, none dare call it treason."

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'Sapere aude'

by Oui (Oui) on Mon Jan 2nd, 2006 at 11:35:00 AM EST

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