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Russia’s Gazprom Shuts Off Natural Gas Supplies to Ukraine
Jan. 1 (Bloomberg) — Russia’s OAO Gazprom cut off natural gas supplies to Ukraine after the country refused to pay more than four times 2005’s rate for the fuel, deepening tensions between the two former Soviet republics.
State-run Gazprom, which supplies a quarter of Ukraine’s gas and uses the country’s pipelines to supply a quarter of western Europe’s, began to shut off supplies to Ukraine at 10 a.m. local time today, Sergei Kupriyanov, a spokesman for the Moscow-based company, said on its NTV television network. “The Ukrainian side is to blame for this. They rejected our offer.”
Ukraine has enough fuel stored to last four months, and both sides have said supplies to western Europe won’t be affected.
MOSCOW, December 30 (RIA Novosti) – Russian energy giant Gazprom and Ukrainian national gas company Naftogaz will continue their attempts to solve a bitter dispute over natural gas supplies and transit today.
Russia offered a $3.6-billion loan to help Ukraine cover its expenses during the move to market prices, but Ukrainian leader Viktor Yushchenko rejected it, saying the country should “pay for itself.”
The dispute between Russia and Ukraine on supplies and transit of natural gas reached it peak after Gazprom proposed selling natural gas to Ukraine for $220-$230 per 1,000 cubic meters and threatened to cut off the supplies if Ukraine refused to sign a revised contract. Ukraine currently pays about $50 per 1,000 cubic meters under a barter agreement.
Ukrainians protest against
Russian gas demands
Although Russian President Vladimir Putin subjected senior managers in the two countries’ energy sectors to some stinging criticism – he all but accused them of creating a crisis in bilateral relations – Gazprom seems to be sticking to its guns.
Echoing previous statements from the monopoly’s leadership, spokesman Sergei Kupriyanov said the company would cut off the supplies of natural gas to Ukraine on January 1 if the parties failed to reach an agreement.” He said the Ukrainian proposals did not reflect the current market situation and prices on the European markets. “They pay more than $250 everywhere,” he said. “The $65 or $80 offer is completely out of market range.”
In turn, Ukraine has said it will raise the transit fees Gazprom has to pay to send its gas to crucial European markets from $1.07 to $3.5 per 1,000 cu m per 100 km for the transit of Russian natural gas to Europe via Ukraine.
● A&A Energy Security Briefing – November 2005 (pdf file)
● Ukraine and Iran discuss oil deliveries to Europe
Read on »»
BERLIN Dec. 11 — Former German chancellor Gerhard Schröder has become embroiled in a sleaze row for accepting a lucrative job with a Russian gas consortium just months after the government he headed had allowed the firm to go ahead with a contract worth £2.7bn. The government approved a controversial new pipeline through the Baltic Sea that will pump Russian gas to markets in Germany and the rest of Western Europe.
Schröder has taken up a senior position on the board of the North European Gas Pipeline consortium (NEGP), which is controlled by Gazprom. German media reports estimate the pay to be between £150,000 and £500,000 a year. The job is being widely regarded as a gift from Vladimir Putin, the Russian president.
Another ally of Putin, Matthias Warnig, the head of Dresdner Bank’s operations in Russia, has been named the chief executive of NEGP.
“Treason doth never prosper: what’s the reason?
For if it prosper, none dare call it treason.”
▼ ▼ ▼ RELATED READING
● Making Sense of the Russian-Ukrainian Gas Spat
● Baltic Pipeline Risks Stirring Up Chemical Weapons: Lithuania
● Russian-Ukrainian Gas Dispute May Affect Germany
● Caspian Oil – A Sunday Special
● Ukraine vs Russia: Tales of Pipelines and Dependence ◊ by Jérôme a Paris
● Putin 2-Day State Visit to The Netherlands ¶ Busy Business Schedule
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By Alexei Makarkin, deputy director general of the Center for Political Technologies.
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
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Saw EuroTrib diary Most important people of 2005, went over to nominate Cindy Sheehan and Patrick Fitzgerald for the U.S., with hope for the New Year: Ohio war veteran Paul Hackett.
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 ::
Jack Abramoff with lawyer before Congress,
an example for many Republicans in the coming year.
“Treason doth never prosper: what’s the reason?
For if it prosper, none dare call it treason.”
▼ ▼ ▼ MY DIARY
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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.
“I will instruct the government and Gazprom to ensure gas deliveries in the first quarter of 2006, with the conditions and rates of 2005. The condition is that before the end of today, the Ukrainian partners sign the contract with Gazprom’s offer for switching to market prices in the second quarter.”
“Treason doth never prosper: what’s the reason?
For if it prosper, none dare call it treason.”
▼ ▼ ▼ MY DIARY
Oui, Thank you for all that you do here for us in the news from abroad. You are one terrific person. Hugs and Happy New Year. I really do enjoy reading your articles.
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Happy New Year BooMan – SusanHu and to all!
Jan. 1 (Bloomberg) — Russia’s OAO Gazprom cut off natural gas supplies to Ukraine after the country refused to pay more than four times 2005’s rate for the fuel, deepening tensions between the two former Soviet republics.
State-run Gazprom, which supplies a quarter of Ukraine’s gas and uses the country’s pipelines to supply a quarter of western Europe’s, began to shut off supplies to Ukraine at 10 a.m. local time today, Sergei Kupriyanov, a spokesman for the Moscow-based company, said on its NTV television network. “The Ukrainian side is to blame for this. They rejected our offer.”
Ukraine has enough fuel stored to last four months, and both sides have said supplies to western Europe won’t be affected.
Read on …
Cross-posted on Sun. Jan. 1, 2006 at 9:00AM local time ::
● European Breakfast – Jan. 1 ◊ by Jerome a Paris
“Treason doth never prosper: what’s the reason?
For if it prosper, none dare call it treason.”
▼▼▼ READ MY DIARY ▼
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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
“Treason doth never prosper: what’s the reason?
For if it prosper, none dare call it treason.”
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Hmmmm, this sounds very much in line with what our corporate government here is doing, gouging!!!
I would love to see our people in the streets rasing hell about fuel, etc, etc….alas, not enough balls here on the home front.
Thanks Oui, as always informative, and precise.
The muckity mucks here keep praising global economy, and all the while hiding the fact of GREED is global ; )
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No need for in-depth analysis and stacks of references, you single line comment covers the issue ever since George met Vladimir and touched his soul! LOL
Hmmmm, this sounds very much in line with what our corporate government here is doing, gouging!!!
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.
“Treason doth never prosper: what’s the reason?
For if it prosper, none dare call it treason.”
▼ ▼ ▼ MY DIARY
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new comments :: Something I found …
Russia’s Gas Showdown
“The essence of the policy’s new direction is not to restore the influence of Russia, which has been allegedly lost in the process of orange revolutions,” the official said on condition of anonymity. However, he added, Russia would not tolerate an arrangement in which it receives neither economic nor political benefits from selling discounted oil and gas.”
● Iraqi Oil – the $250bn gift to Saudi Arabia and Russia
◊ by Jerome a Paris
“Treason doth never prosper: what’s the reason?
For if it prosper, none dare call it treason.”
▼ ▼ ▼ MY DIARY
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Ukraine Stole 100 mln m³ of Natural Gas —
EU countries react to dispute and cut in gas delivery
“Treason doth never prosper: what’s the reason?
For if it prosper, none dare call it treason.”
▼ ▼ ▼ MY DIARY
Well ,well,well, who’d a thunk it- energy wars.
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Monster just surfaces at unexpected moments …
Difficult to define St. George and who is the dragon?
“Treason doth never prosper: what’s the reason?
For if it prosper, none dare call it treason.”
▼ ▼ ▼ MY DIARY
Cute Oui- we see it rearing its ugly head?
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To catch a glimpse of Nessie, some persons spend a lifetime and still never manage a single sighting! LOL
“Treason doth never prosper: what’s the reason?
For if it prosper, none dare call it treason.”
▼ ▼ ▼ MY DIARY
Gee there is something poking its head out of the marsh out there- Nessie offspring migrating SW?? Naver mind-it’s a great blue heron.
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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.”
▼ ▼ ▼ MY DIARY
Just an off the hat question here.do you think that Abramhoff (sp) had any thing to do with this and with the connection in the WH?
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Our lobbying entertainer collecting millions through scams and spending equal amounts on funding projects, such as donations to Jewish settlers on the West Bank in occupied Palestinian territory. I have not read of ties with the Russian mafia.
The billionaire Roman Abramovich is much more relaxed and has a friendly relationship with Vladimir Putin, he recently sold Sibneft to Gazprom. As a result Roman could be spending more $100mln investments in Western Europe the coming months.
“Treason doth never prosper: what’s the reason?
For if it prosper, none dare call it treason.”
▼ ▼ ▼ MY DIARY
that is the guy who laundred 1 mil. dollars thru Abramoff (sp)..tha tis the guy!!!!!!!!
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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 …
Russia Vows to End Gas Shortage to Europe
Mon Jan 2nd, 2006 at 04:01:06 PM PST
“Treason doth never prosper: what’s the reason?
For if it prosper, none dare call it treason.”
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