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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.
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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.”
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