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European Gas Supplies in Danger?

by dvx Fri Dec 30th, 2005 at 04:34:19 AM EST

Update by wab: 12-30-05; 10:26am MET More news on this subject today in BBC World News: Russia-Ukraine gas deadline looms. Though there is skepticism that this is nothing more than economic brinksmanship...but what if...there was a stoppage of gas from Russia to Europe? How might we all deal with this?

Update [2005-12-30 5:19:0 by Jerome a Paris]: I have bumped the diary back into the diaries. I will only front page a story on this topic that thoroughly debunks the spurious Russian claims that thye will cut off any gas deliveries...

Ukraine has rejected Moscow's offer of a loan to help pay for a controversial hike in the cost of Russian gas.

Russia wants to quadruple the amount it charges Kiev for the gas in order, it says, to bring it up to global norms - but Ukraine is accusing it of spite.

Russian President Vladimir Putin says the impasse has led to a "real crisis" in relations between the two countries.

Russia says it will cut gas supplies by Sunday if Kiev does not comply.(...)

Russia and Ukraine are set to resume crisis talks on Friday in a bid to resolve a dispute over gas prices.

According to German wire service dpa, a little noted dispute between Russia and the Ukraine threatens to impair gas supplies to Western Europe as of January 1st.

From today's Frankfurter Rundschau: Ukrainian Energy Minister Seeks Solution in Moscow

Moscow/Kiev (dpa) - In the dispute over Russian gas supplies, the Ukrainian energy minister Iwan Platschkov is expected to arrive in Moscow today (Wednesday) for further negotiations. The conflict between the governments in Moscow and Kiev escalated further on Tuesday.

Russian defense minister Sergej Ivanow threatened to revoke recognition of Ukrainian borders. According to German utility companies, the threatened cessation of gas supplies to the Ukraine would also affect gas supplies in Western European countries.

Platschkov reported in Kiev on Tuesday evening that an agreement regarding a gradual increase in prices for Russian natural gas had already been reached. However, the Russian gas producer Gasprom denied this immediately.

Gasprom wants to stop supplying natural gas to the Ukraine effective 1 January in the event that Kiev refuses to accept a price that is almost five times higher. Russian industry minister Viktor Christenko stated that there will not be any better offer than the USD 230 (EUR 194) per 1000 cubic meters of gas demanded. Kiev's energy minister Platschkov threatened to withhold 15 percent of the Russian gas pumped through the country to Western Europe as a transit fee in the event that Gasprom suspends direct supply to the Ukraine.

A spokesperson for the German gas supplier Eon-Ruhrgas told the newspaper "Tagesspiegel" (Wednesday edition) that a possible suspension of gas supplies would also threaten Germany: "If the conflict goes on and the winter is very cold, we will reach our limits at some point." (in German)

Today's Rundschau also describes the background to this conflict. As one might expect, it's not about gas:

De facto, Russia is presenting the Ukraine with the bill for last winter's undesired regime change to the Western-oriented president Viktor Yushchenko. Kremlin boss Vladimir Putin had backed the other side, former minister president Viktor Yanukowitch, and experienced his most bitter foreign-policy defeat. "All the emotions that have built up between Moscow and Kiev following the victory of the 'Orange Revolution' are concentrated in a single cubic meter of gas," observed the Russian newspaper "Kommersant" on Tuesday.

It is also the first example of the new Putin Doctrine, according to which Russia will assert its great-power ambitions using its strong position as an energy supplier.

The article adds that the conflict threatens to spread to other issues: Kiev back-benchers are starting to claim that Russia pays too little for its Black Sea naval bases on Ukrainian territory, and the Russian defense minister counters by asserting that the granting of these bases is linked with Russia's recognition of the Ukraine's borders.

I am sure that others around here can better judge the likelihood worse will actually come to worst. But there seems to be an uncomfortable likelihood that those of us in Western Europe will learn what collateral damage feels like.

We're experiencing a cold snap right now - nice thing to think about, isn't it?

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Wed Dec 28th, 2005 at 06:09:18 AM EST
This is making news here in Switzerland, though as of yet no dire warnings (which may come later, if Russia and Ukraine don't sort this out...)

"Once in awhile we get shown the light, in the strangest of places, if we look at it right" - Hunter/Garcia
by whataboutbob on Wed Dec 28th, 2005 at 07:14:24 AM EST
What do oyu mean, "little noted"?? It's been making headlines everywhere for the past two weeks, at least... undeservedly so.

This is a lot of noise for nothing. Nothing will happen.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Dec 28th, 2005 at 10:35:25 AM EST
You're right, there was a news spike around 13/14 December, which I must have missed. The issue (re)surfaced in the German-language media in the last 24 hrs, and is getting a lot of play.

How do you see this being resolved?

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

by dvx (dvx.clt št gmail dotcom) on Wed Dec 28th, 2005 at 12:21:04 PM EST
[ Parent ]
My guess is that Russia wants the EU involved in its dispute with Ukraine. Another, less obvious goal, may be to put some pressure on Poland to agree to Gazprom's proposals regarding the route of the second section of the Yamal-Europe pipeline. It would give Gazprom the opportunity to bypass Ukraine to a certain extent.
by aquilon (albaruthenia at gmail dot com) on Wed Dec 28th, 2005 at 04:45:39 PM EST

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