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Russia, Ukraine Dispute Leaves European Nations Without Gas

ctipz

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Russia flexing there muscles???

http://www.foxnews.com/story/0,2933,476565,00.html

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KIEV, Ukraine —  At least two Bulgarian cities were totally without gas Tuesday, and nations like Turkey were turning to Iran to bolster their supplies, as a natural gas crisis looms over Europe after a contract dispute between Russia and Ukraine led Russia to shut off gas supplies to seven countries and reduce gas deliveries to several others.

The shortfalls came one day after Russian Prime Minister Vladimir Putin ordered Alexei Miller, chief executive of the Russian state gas company Gazprom, to cut supplies shipped through Ukraine by amounts equal to those Russia claims Ukraine has "stolen," AFP reported.

"Start reducing it from today," Putin told Miller in a meeting at Putin's residence.

Russian gas shipments via Ukraine to Hungary halted, Reuters reported, and the Hungarian government said it would ask some power plants to switch to alternative fuel by Wednesday.

Miller told Putin on Monday that Ukraine had since Jan. 1 "stolen" 65.3 million cubic meters of gas that were supposed to have flowed through Ukraine into Europe, AFP reported.

Click here for photos.

Miller said the debt Ukraine owes Gazprom is still above $600 million, but said: "If they continue to illegally take gas it will soon be billions."

RelatedStories
Ukraine Warns EU of Possible Serious Gas Shortages Photo Essays
Russia, Ukraine Gas War In a sharp turnaround, the European Union blasted Russia and Ukraine, saying the sudden cutoff to some of its member countries was "completely unacceptable." Just a day ago, the EU was trying to downplay any problems from the gas dispute.

In response, Russia and Ukraine agreed to hold new talks on the contract dispute over Russian natural gas that travels to Europe through Ukraine's pipelines. The two neighbors are locked in a dispute over pricing and overdue payments. Russia cut off supplies to Ukraine on Jan. 1 but had promised to keep gas moving to Europe.

The head of the Ukrainian gas company Naftogaz, Oleh Dubina, said he would travel to Moscow on Thursday for new talks. He made the decision after speaking to Miller.

"Given the crisis situation, we are ready to start talks at any moment," said Gazprom spokesman Sergei Kupriyanov.

Wednesday is Orthodox Christmas, a holiday in both Russia and Ukraine.

The energy dispute sharply escalated Tuesday when six countries on the other end of the pipeline network running from Russia through Ukraine reported a complete shutoff. Russia supplies Europe with about a quarter of its gas, 80 percent of which is shipped through Ukraine.

Hungary, Bulgaria, Greece, Macedonia, Romania, Croatia and Turkey all reported a halt in gas shipments. Croatia said it was temporarily reducing supplies to industrial customers and urged consumers to use gas sparingly in their homes. Bulgaria said it had enough gas for only "for a few days."

Bulgaria's President Georgi Parvanov said the country could start immediate preparations to relaunch Unit 3 of its Kozlodui nuclear power plant. The aging two 440-megawatt reactors were shut down two years ago, and Parvanov said one of them could be opened within a month.

Two cities in eastern Bulgaria, Varna and Dobrich, were left with no natural gas supplies on Tuesday. In Varna, on the Black Sea coast, the shortage left 12,000 households without central heating amid freezing temperatures.

Turkey's Energy Minister Hilmi Guler confirmed the gas cutoff and said the country was trying to compensate with supplies from other sources including another Russian pipeline beneath the Black Sea.

During a similar dispute between Ukraine and Russia in 2006, which lasted just three days, several West European countries saw their gas supplies drop by 30 percent or more. That crisis led to criticism of Russia as an unreliable energy partner and spurred talk of finding ways to diversify Europe's energy supply.

Up to Monday, the EU has said that the dispute would not affect consumers in the coming weeks. The sudden drops Tuesday, however, increased the diplomatic pressure to find a solution.

In a strongly worded statement, the EU complained that gas had been cut "without prior warning and in clear contradiction with the reassurances given by the highest Russian and Ukrainian authorities to the European Union."

Other countries lost significant amounts of gas as well. Austria lost 90 percent of its normal Russian gas supplies on Tuesday — about half its total supply. It said it had three months' gas reserves but called an emergency meeting at its Economy Ministry.

In Slovakia, gas importer SPP AS was considering declaring a state of emergency Tuesday after its gas deliveries from Russia were down by 70 percent.

The Czech Republic and Hungary also reported significant supply drops. The Czech gas company RWE Transgas said it expects only 25 percent of its normal supplies Tuesday from Russia, while Hungary predicted its cut would be greater than the 20 percent it saw on Monday.

Moscow and Kiev, meanwhile, blamed each other. Naftogaz said Gazprom had sharply reduced its shipments to Europe through pipelines crossing Ukraine, triggering the cuts. Gazprom accused Ukraine of stealing gas shipments intended for other nations.

Kiev denied it was stealing Russian gas. It said was using some of its own gas as fuel to transport the rest of the Russian gas to Europe. Naftogaz says Gazprom is obliged to provide this gas but is refusing.

Gazprom said it was sure it could provide Europe with enough gas.

"We are confident that we will be able to get through this situation without any damage to the gas production and transit system," deputy chairman Alexander Medvedev was quoted as saying by RIA-Novosti. "The only issue is gas transit to Europe through Ukraine."

On Monday Gazprom said it would cut the amount of gas it ships to Europe through Ukraine by 65.3 million cubic meters, or about 20 percent — the amount it accuses Ukraine of diverting from its transit pipeline network over recent days.

Poland was considering limits on deliveries to heavy industry, even though so far Russia has compensated for shortfalls through Ukraine by shipping extra gas to Poland through a pipeline in Belarus.
 

The Bread Guy

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And here's who's freezing in the cold (figuratively speaking, for now).....
- AUSTRIA: Russian gas supplies were cut 90 percent on Tuesday but on Wednesday Economy Minister Reinhold Mitterlehner said reserves for both households and industry could last three months.

- BOSNIA: The capital Sarajevo, freezing at minus 10 degrees Celsius (14 degrees Fahrenheit), was hit hardest where 72,507 households spent the night without heating.  Totally dependent on Russian gas supplies, which have been cut entirely, the government is to send a letter to both Kiev and Moscow to protest an "unannounced and irresponsible cut of gas supply."

- BULGARIA: Bulgaria began rationing supplies for industry and households were urged to save gas and electricity despite arctic weather.  In Sofia, mayor Boiko Borisov ordered heating in all public transportation to be switched off and buses running on gas were temporarily withdrawn from use.

- CROATIA: Supplies of Russian gas were stopped again at midnight for the second time in less than 24 hours. Authorities said they hoped to have supplies for households, schools, hospitals and other institutions of common interest over the next three weeks.  "There is no reason to panic but there is a reason to be serious," Prime Minister Ivo Sanader said.

- CZECH REPUBLIC: Gas supplier RWE Transgas said Russian supplies via Ukraine had stopped but it had negotiated increased deliveries from Germany of Russian and Norwegian gas.

- FRANCE: French Premier Francois Fillon is to hold meeting on gas supplies with industry figures on Wednesday.

- GERMANY: Continues to have access to Russian deliveries via Belarus and has substantial reserves.

- GREECE: Public Gas Corporation says households will continue to be supplied normally but industrial users may face cuts from Sunday if Russian supplies cannot be restored.

- HUNGARY: Hungary curbed natural gas supplies to large industrial users overnight to protect consumers, following a complete delivery halt from Russia.

- ITALY: Italy began tapping national gas reserves after Russia all but halted its supplies. "It's a standard procedure ... not an emergency procedure," used when pressure on the national grid drops below a certain level, an economic development ministry official said.

- POLAND: Poland's national gas company PGNiG announced restrictions on supplies to chemical giant Pulawy and oil group PKN Orlen.

- ROMANIA: Romania declared a state of emergency on Wednesday as deliveries of Russian gas ceased entirely but the government insisted the country had sufficient reserves to last up to 80 days.  Following an emergency meeting with officials from the gas sector, Economy Minister Adriean Videanu described the situation as "serious, but not impossible."

- SERBIA: Russian natural gas supplies fell by 50 percent. Serbian national gas company Serbijagas director Dusan Bajatovic warns the Russia-Ukraine dispute "has created an exceptional situation which could get worse."

- SLOVAKIA: Prime Minister Robert Fico says Slovakia might reopen a closed power generating unit at Jaslovske Bohunice nuclear plant if gas supplies from Russia continue cut.  "Should Slovakia continue to be a hostage of this bilateral conflict between Russia and Ukraine, I can imagine reopening of the shut-down unit at Jaslovske Bohunice nuclear plant," Fico said.

- SLOVENIA: Russian gas deliveries to Slovenia were cut overnight but importer Geoplin said it could guarantee supplies to Slovenian consumers by using the reserves in Austria's Baumgarten storage facility. It urged people to use gas sparingly.

- TURKEY: Russian gas supplies transiting through the Balkans are entirely halted Tuesday and Turkey increases gas imports through Blue Stream, a pipeline running under the Black Sea via which it receives most of its gas.
 

oligarch

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Communism is over. The Soviet Union is over. You don’t pay, you don’t play. Yushenko is a lunatic who is trying to create a crisis to be popular. Ukraine is on the grain of default. The people of Ukraine will blame him if it happens. He is trying to make it look like Russia is going to bankrupt their corrupt government, to take the blame away from his irresponsible actions over the past few years.

Ukraine is a transit country and it is their contractual obligation to deliver the gas. Ukraine is like a pizza delivery boy who ate the pizza because he was hungry. EU’s beef is with Ukraine, not Russia.
 

Edward Campbell

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I am inclined to support oligarch on this one.

While we cannot know all the details, I am reasonably confident that the Ukrainians are at least partly to blame because they were stealing gas.

That being said, the Russians remain thuggish in their response.

 

Edward Campbell

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And further, here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail is a report about prospects of getting the gas flowing again:
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http://www.theglobeandmail.com/servlet/story/RTGAM.20090109.wukrainerussiagas0109/BNStory/energy/home

Russia may resume gas shipments Friday

MARIA DANILOVA

The Associated Press

January 9, 2009 at 11:40 AM EST

KIEV — Russia's Gazprom said it could restart gas shipments to Europe on Friday if an agreement can be signed allowing an EU-led monitoring mission to track gas flows through Ukrainian pipelines.

EU monitors arrived Friday in the Ukrainian capital of Kiev, but Gazprom chief executive officer Alexei Miller said a final agreement on their deployment has yet to be signed. Russia wants monitors in place to prevent what it described as Ukraine's theft of supplies meant for Europe – a charge Kiev hotly denies.

“Our goal is to show who is to blame for stealing gas,” Russian President Dmitry Medvedev said. “Such thievery can't be left unaccountable.”

Gazprom halted all natural gas shipments through Ukraine on Wednesday, ending or reducing gas supplies to more than a dozen European nations amid a pricing dispute with Kiev.

Russia in the past has sold gas to Ukraine and some other ex-Soviet neighbours at prices significantly less than European prices.

Mr. Medvedev said Friday that Ukraine should pay a European price for the Russian gas. Last year, Russia charged Ukraine $179.50 per 1,000 cubic meters, about half what it charged its European customers.

Russia's last offer before talks broke down was $250, but Gazprom said the offer no longer stands after Ukraine rejected it and that it will charge Ukraine $450.

Mr. Miller pledged Gazprom would resume shipments to Europe once the EU and Russian monitors were in place at pipeline pumping stations across Ukraine – a country roughly the size of South Africa or Texas. The EU said it could then take days for the shipments to reach western Europe.

But Mr. Medvedev, who met with Mr. Miller in the southern Russian city of Sochi, emphasized that Russia will only resume deliveries to Europe after a written agreement is in place. Mr. Miller later said that Ukraine had softened its position and expressed hope for signing the deal quickly.

Spokesman Valentyn Zemlyansky of Ukraine's state gas company Naftogaz said Russia was the one dragging its feet on the deal.

“They are just wasting time, trying to make this process as long as possible,” Mr. Zemlyansky told The Associated Press.

Czech Prime Minister Mirek Topolanek, whose country holds the EU presidency, was travelling to Kiev to help wrap up the monitoring deal.

“The mission is sensitive. Both sides want to save face,” Mr. Topolanek said before departing from Prague. “I'm a bit optimistic, but don't expect me to give any assurance that it will be definitely solved today.”

Russia had insisted its representatives be included in the EU monitoring mission, and Ukraine agreed on Friday, officials from the EU and Ukraine said.

“It is now imperative that the gas starts to flow,” the EU said in a statement.

Once gas shipments resume, it “will take at least three days” for the first gas to reach European consumers, EU spokesman Ferran Terradellas said.

The halt in gas supplies has left European nations struggling to cope during a harsh winter. At least 11 people have frozen to death this week in Europe, including 10 in Poland, where temperatures have sunk to minus-25 C.

Fifteen countries – Austria, Bulgaria, Bosnia, Croatia, the Czech Republic, France, Greece, Hungary, Italy, Macedonia, Romania, Serbia, Slovakia, Slovenia and Turkey – said their Russian supplies ceased Wednesday. Germany and Poland also reported substantial drops in supplies.

EU governments have criticized both Russia and Ukraine for the gas crisis, saying it was unacceptable to see homes unheated, businesses closed and schools shut down in the middle of winter because of the commercial squabble.

French Prime Minister Francois Fillon urged a unified European response “so as not to be held hostage to the Russian-Ukrainian energy crisis.”

“I solemnly call on the two parties to scrupulously respect their obligations with us,” he told a capitalism conference in Paris.

The two former Soviet republics are locked in tense negotiations over future prices and debt.

Ukraine's Naftogaz promised the first gas supplies would go to Bulgaria, where thousands of homes are without heating and factories have been shut.

The Sofia Zoo in the Bulgarian capital declared an emergency Friday after being left with no central heating. The zoo was using electric heaters for its 1,300 animals, some of which needed temperatures of at least 20 C, director Ivan Ivanov said.

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The Western Europeans are learning that Russia is not quite like them – and do we they really want Ukraine in NATO?


 

Edward Campbell

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Further to my last, here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail web site is a report that a deal has been brokered to get the Russian gas moving again:
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http://www.theglobeandmail.com/servlet/story/RTGAM.20090110.weugas1001/BNStory/International/home

Ukraine signs on to EU-brokered gas deal with Russia

MARIA DANILOVA

Associated Press

January 10, 2009 at 7:55 PM EST

KIEV, Ukraine — Ukraine on Sunday accepted a deal on the European Union-led monitoring of Russian gas transit across its territory, opening the way for restarting Russian natural gas supplies to a freezing Europe after a four-day halt in shipments.

Russia wanted the written deal to renew gas shipments suspended amid a bitter contract dispute with Ukraine – a move seen by many as another attempt by Moscow to reassert its clout over Western-leaning former Soviet republics.

Russia said it needs European Union monitors deployed to Ukraine to prevent it from stealing Russian gas intended for Europe. Ukraine hotly denied the claims.

Czech Prime Minister Mirek Topolanek, whose country holds the rotating EU presidency, shuttled between Moscow and Kiev on Saturday to mediate the deal. He finally persuaded Ukraine to accept the monitoring pact during marathon talks that dragged past midnight.

“Nothing prevents Russia now from resuming gas supplies,” Mr. Topolanek said after Ukrainian officials endorsed the deal.

“We once again have shown our goodwill,” said Ukraine's Prime Minister Yulia Tymoshenko said, adding that the monitoring mission would uphold her nation's image as an “honest transit country.”

Russian Prime Minister Vladimir Putin promised that Moscow will resume gas shipments once the deal is signed and monitors are in place.

Mr. Putin didn't say how quickly Russia may restart supplies, but Bohdan Sokolovsky, an energy adviser to the Ukrainian president, told The Associated Press it would take Russia some 30 hours to begin gas deliveries and it would then take another 36 hours for Ukraine to move gas to its western border.

Russia supplies about a quarter of the EU's natural gas, most of it shipped through Ukraine, and the disruption has come during a harsh winter. At least 11 people have frozen to death this week in Europe, including 10 in Poland, where temperatures have sunk to minus 13 degrees.

Mr. Topolanek talked with Mr. Putin for more than five hours at his suburban residence outside Moscow after visiting Ukraine the previous night. He then rushed back into the Ukrainian capital late Saturday to get Ukraine's approval.

“This agreement is very important for us,” Mr. Topolanek said during the talks with Ukrainian officials. “We can't allow the entire energy system of Europe to collapse.”

Ukraine initially objected to the monitoring pact, voicing concern that it could give Russian officials too much access to the Ukrainian gas transit system. Mr. Putin insisted the deal is needed to make transit fully transparent and warned that Russia could again reduce shipments if Ukraine siphons gas.

“Once the monitoring mechanism starts working, we will start gas supplies,” Mr. Putin said after the talks with Mr. Topolanek. “But if we see them stealing it again and part of the gas is missing, we will again reduce supplies by that amount.”

Monitors, including representatives of the European Commission, European energy companies and Russian and Ukrainian gas officials, will travel to gas pumping stations on Ukraine's eastern and western borders to track the gas flow.

Mr. Topolanek said there is no time limit for the observers' mission and Mr. Putin said “the longer they stay, the better it is for us, Ukraine and European consumers.”

Mr. Topolanek briefly interrupted his talks with Mr. Putin to speak on the phone with U.S. President George W. Bush. Mr. Bush “welcomed the Czech-led EU efforts to help resolve the energy crisis by ensuring natural gas begins flowing again from Russia to Ukraine and Europe,” said Gordon Johndroe, a spokesman for the U.S. National Security Council.

Earlier this week, U.S. National Security adviser Stephen Hadley warned Russia that using its energy exports to threaten its neighbours will undermine its international standing. The Bush administration has long accused Russia of using energy as a weapon to strong-arm its ex-Soviet neighbours.

The Russian state natural gas giant Gazprom halted the shipment of gas intended for Ukraine on Jan. 1 after negotiations over a new gas contract broke down.

Russia then accused Ukraine of siphoning its gas intended for Europe and finally turned off the taps on all gas shipped through Ukraine on Wednesday, ending or reducing gas supplies to more than a dozen European nations as winter turned bitterly cold across the region.

A commercial dispute over gas transit and prices triggered the crisis but relations between the two ex-Soviet neighbours have been strained since the 2004 Orange Revolution in Ukraine led to the election of a pro-Western government in Kiev.

Mr. Putin denied allegations that Moscow was pursuing political goals in the gas dispute, saying it wants market-based economic relations with its neighbour.

Russia has been keen to restore its clout in the former Soviet sphere, and it has sold gas to Ukraine and some other former Soviet neighbours at prices significantly lower than those it charges Europe in the past.

EU governments have criticized both Russia and Ukraine for the crisis.

Russian President Dmitry Medvedev said Friday that Ukraine should pay a European price for the Russian gas. Last year, Russia charged Ukraine $179.50 per 1,000 cubic metres, about half what it charged its European customers.

Ukraine's Naftogaz company chief Oleh Dubyna said the latest round of talks on the gas contract for this year ended Saturday without result. He said Gazprom offered to supply gas at a price of $450 per 1,000 cubic meters.

Fifteen countries – Austria, Bulgaria, Bosnia, Croatia, the Czech Republic, France, Greece, Hungary, Italy, Macedonia, Romania, Serbia, Slovakia, Slovenia and Turkey – said their Russian supplies ceased Wednesday. Germany and Poland also reported substantial drops in supplies.

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My, personal guesstimate of the situation:

• Ukraine’s Naftogaz probably did siphon off some of the gas meant for Europe, presumably because Russia’s Gazprom limited the amount of low priced gas it would supply for Ukrainian use; but

• Russia, as opposed to just Gazprom decided to use the current cold weather ‘crisis’ in Europe to act in a typically thuggish manner to remind everyone that Russia is still a ‘major power’ and can throw its weight around like the bully state it is.

This further highlights the European natural gas dilemma:

• Natural gas is a relatively clean, easy to use fuel;

• Europe is quickly exhausting its own natural gas reserves;

• Russia has huge gas reserves, but –

o Russia is an untrustworthy supplier,

o China also wants Russia’s gas; and

• ‘New’ sources are getting harder and harder to find but the volatile Middle East still has the largest proven reserves.

So, Europe is caught in a dilemma between growing global (China + India) demand and only stable but unreliable providers. Rock and hard place, anyone?


 

time expired

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Tsar Putin is persueing two objectives here,a political one and an
economical one.
  First the political,he wishes to demonstrate that he can hurt the
economy of any european country that does not agree with Russia`s
policys.The Ukraine is just the target of choice at the present time
but I am sure every country in Europe has paid close attention.
The economical objective is keep the price of gas at an artificially
high level to alleviate the huge losses in oil revenues that the
Russian economy has expereinced in the last few months.During
the time prior to the economic crisis gas prices rose at the same
rate as the oil price,although the was no shortage of gas, companies
like Gasprom saw their chance to make a killing and kept pushing
the price higher.Logically as the oil price fell so should have the gas
price fallen and everyone in Europe was waiting for the gas prices
to fall.Putin`s efforts to avoid this further loss in revenues was to
try to form an OPEC type of organisation to regulate the gas price
(higher)this failed, so he the created this crisis.
                                                Regards
 

oligarch

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I feel it will be beneficial to the discussion if I commented on several statements made above.

Before I comment on E.R. Campbell's point, I want to thank E.R. Campbell for an overall fairly weighted opinion. I wish - however - to dispute the point made that Russia is an unreliable supplier and once again make the point that it is Ukraine who is an unreliable transit country. To back up this point I bring up the fact that during the Russian millitary conflict with Georgia, the Russian side did NOT turn off the gas to Georgia and continues to this day delivering gas as per its contractual obligations with Georgia. Georgia, however, has turned off the flow of Russian gas to South Ossetia (the main russian pipeline enters georgia not through ossetia, and it is then resent there by georgia). Repeating the matra that Russia is using gas as a "political weapon" - i think - is inappropriate in light of this circumstance. Russia also has moved to European prices with the Baltic states and has no trouble with Gas deliveries, even considering the political tension between Russia and these states.

I think that to enchance energy security in Europe the EU should support diversity of supply of Russian gas. I say build Nord Stream, build more pipelines that go around Ukraine that are able to reach European countries who have acted in good faith and do not want to be held hostage by the Ukrainian side in the future. I do not have anything against Nabucco either, but saying that the Russian side has proven itself to be an unreliable supplier would entail ignoring many details and facts.

I think Putin's suggestion that the EU provide credit for Ukraine to pay off the debt to Russia is a good one. It appears that Ukraine wishes to improve relations with the EU and this will a definite chance for Ukraine to demonstrate itself in a good light, if it pays off all of its debts promptly without trouble. However, having the knowledge I have about this country, I doubt this will take place. I forsee a default, but that's just a personal opinion, even a fear of mine, because I have lived through the default in Russia and do not believe that the truly pleasant people of Ukraine deserve to suffer this fate.

The second statement I wanted to comment on is by time expired. While some of time expired's concerns have been addressesd above, one has not. This is the price of natural gas. Natural Gas and prices of other energy producing substances are called - in economic terms - substitutes in consumption. When the price of one subsitute in consumption increases, the prices of the others follow due to increasing demand. Gazprom does not artificially "set" these prices. Gazprom's long term market based contracts with its European clients are based on the price of oil, other fuels, and energy producing substances over an amount of time i am not certain of, but I'm sure it extends into several months or a year. The resulting price of natgaz to a given country is a moving weighted average of the basket of these prices plus the cost of delivery. Gazprom - unless it can controll the price of oil and other substitutes - and as we see today's oil prices I highly doubt this, does not determine the price for natural gas in long term contracts with its European clients. Next year the prices should fall if oil stays low. This happens automatically without any decision by Gazprom.

My hopes are that both sides to this dispute act in a civilized fashion and the the role of the EU remains fair and impartial.

E.R. Campbell, may I trouble you for a personal opinion? In case this comes accross as some sort of challenge I want to make clear that my objectives in asking you this are for expanding my own ideas and not anything else. You say that Russia has acted "thuggish". Can you say more as to what made you say this? Assuming that it is true that Ukraine has been stealing Russian gas for years, what would you call a more appropriate response by Russia. I ask you to assume this even if you do not personally believe this, just for the sake of discussion. What would you see as a "perfect response" by Russia to this conflict created by Ukraine. Thank you in advance for your input should you choose to make it.

Cheers!
Oligarch :)
 

meni0n

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What's also interesting is that the price Russia is asking went from 250$ to 418$ and then when Putin said to make it 450$, it became 450$. Did costs somehow magically double in that short period of time? Also good to note, versus what Russia has been saying, no European energy agency has yet to divulge what is it paying for gas. Because, the prices that Russia is claiming they're paying is false and they don't want to go against the grain in order not to upset anyone politically and get their prices up. Gazprom also refuses to divulge the formula of how exactly it determines which country pays how much for gaz. So Russia and Gazprom are not the innocent angels in all of this.
 

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Here is more, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the CBC News web site:
--------------------
http://www.cbc.ca/world/story/2009/01/11/russia-ukraine.html

Russia says gas deal is not valid because of Ukrainian add-on

Last Updated: Sunday, January 11, 2009 | 4:46 PM ET

CBC News

Russia's president has rejected a deal to resume the flow of his country's natural gas to European countries from pipelines that cross Ukraine.

Dmitry Medvedev declared the European Union-brokered deal invalid on Sunday because of a handwritten document attached to Kiev's agreement.

The two countries separately signed agreements on Saturday, but Medvedev has denounced the additions set out in a so-called declaration.

He called Kiev's declaration that it has not been stealing gas and that it has no outstanding debts to Russia's state-owned utility Gazprom a "mockery of common sense."

He also urged EU officials to demand Ukraine withdraw its declaration that it issued to accompany the agreement.

The European Commission says the declaration can't change the deal, but Russian Foreign Minister Sergey Lavrov told Medvedev that the copy of the deal Russia has received contains Ukraine's stipulation that it only is valid along with the declaration.

Prime Minister Vladimir Putin has proposed sending Russian energy officials to a meeting of EU energy ministers in Brussels on Monday to explain Moscow's position.

The EU's executive commission said Sunday there was no reason to further delay gas supplies because EU monitors are in place to check that no gas intended for Europe is siphoned off in Ukraine.

Russia cut off gas deliveries through Ukraine on Jan. 1 in a dispute over pricing and transit fees.

Moscow alleges that Ukraine illegally siphoned off supplies meant for other European countries between Jan. 1 and Jan. 7 — a charge Kiev denies.

The monitoring agreement would allow European, Russian and Ukrainian experts to measure the flow of Russian gas through Ukrainian pipelines.

Even if Russia does an about-face on the deal, Ukrainian officials say it would take three days to rebuild adequate pipeline pressure for gas to reach the West.

Gazprom supplies one-quarter of all natural gas consumed by EU countries, and 80 per cent of that gas is piped through Ukraine.

The hardest-hit of the 18 countries affected by the gas cutoff include Bulgaria, Moldova and Bosnia.

With files from the Associated Press

--------------------


This is a classic example of Russian thuggishness.

Russia has a dispute with Ukraine over some gas that might (let’s say, for the sake of agreement, was) stolen. So does Russia deal with Ukraine? No; it tries to bully the EU, its customers, into forcing Ukraine to do whatever Russia wants. But, in fact, what Russia wants is for Ukraine to ‘come to heel’ and be a good little satellite again.

Russia is blackening its reputations for fair dealing, such as it ever was, by acting in an arbitrary and capricious manner – like a schoolyard bully, like the old USSR. I’m sure this is popular with the Russian people; they rather liked being feared (no one ever really respected Russia, save, perhaps for the courage and tenacity of the common people); but that’s a thuggish response, too.

Russia chose this moment, when several European states are in dire need of natural gas, to throw its weight around. The message is not lost on anyone: Russia is not to be trusted. Russians are thugs. I suspect that’s not the message many ‘modern’ Russians want to send, but …

 

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E.R. Campbell said:
This is a classic example of Russian thuggishness.

Russia has a dispute with Ukraine over some gas that might (let’s say, for the sake of agreement, was) stolen. So does Russia deal with Ukraine? No; it tries to bully the EU, its customers, into forcing Ukraine to do whatever Russia wants. But, in fact, what Russia wants is for Ukraine to ‘come to heel’ and be a good little satellite again.

Russia is blackening its reputations for fair dealing, such as it ever was, by acting in an arbitrary and capricious manner – like a schoolyard bully, like the old USSR. I’m sure this is popular with the Russian people; they rather liked being feared (no one ever really respected Russia, save, perhaps for the courage and tenacity of the common people); but that’s a thuggish response, too.

Russia chose this moment, when several European states are in dire need of natural gas, to throw its weight around. The message is not lost on anyone: Russia is not to be trusted. Russians are thugs. I suspect that’s not the message many ‘modern’ Russians want to send, but …

I understand that you believe Russia to be thuggish in its approach. Perhaps you may be right. However, I cannot see a different possible way for Russia to respond. What I'm trying envision is an alternative way for Russia to deal with the problem. So what response would not be considered "thuggish" by Russia? I guess I'm looking for some constructive, rather than destructive, criticism. I really believe it would bring this discussion to a whole new level.

I'm looking for something like "it would have been better if instead of the path it chose to taken that Russia instead would have......"

Cheers!
 

a_majoor

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oligarch said:
So what response would not be considered "thuggish" by Russia? I guess I'm looking for some constructive, rather than destructive, criticism. I really believe it would bring this discussion to a whole new level.

I'm looking for something like "it would have been better if instead of the path it chose to taken that Russia instead would have......"

Well Edward's post which you quoted says:

E.R. Campbell said:
This is a classic example of Russian thuggishness.

Russia has a dispute with Ukraine over some gas that might (let’s say, for the sake of agreement, was) stolen. So does Russia deal with Ukraine? No; it tries to bully the EU, its customers, into forcing Ukraine to do whatever Russia wants. But, in fact, what Russia wants is for Ukraine to ‘come to heel’ and be a good little satellite again.

The fact is Russia cut gas to EU customers rather than go through legal channels to deal with the appropriate Ukrainian authorities or corporations in this dispute, so it is difficult to see what the better path is so long as Russia chooses Rule of Force over Rule of Law.
 

Kirkhill

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Without regard to the nature of the relationships here, and whozoominwho, I think here we are really seeing the genesis of the Global Warming debate in action.

Global Warming alarmism, in my opinion, has always been led by Europe:  Europe which doesn't have a steady supply of fuels of any type (not sure about the status of the coal mines in the Saarland but they seem to have put coal beyond use).

Europe imports all its energy putting it at a serious strategic (as demonstrated just now) and commercial disadvantage.  They are forced to adopt high capital cost, high efficiency systems to wring out every advantage they can.  Likewise they are forced to find alternative energy sources, like wind and solar.  But even  doing that they still are at a competitive disadvantage against countries like the US and Canada that have access to cheap and secure conventional energy.  They are also at a disadvantage when compared to China and India that are still willing to use coal but are bound by simple economics to run as efficiently as they can.

Global Warming adjustments have always benefited the EU most as, if accepted, it would level the playing field and make the EU competitive with a hobbled US.
 

oligarch

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Thucydides said:
Well Edward's post which you quoted says:

The fact is Russia cut gas to EU customers rather than go through legal channels to deal with the appropriate Ukrainian authorities or corporations in this dispute, so it is difficult to see what the better path is so long as Russia chooses Rule of Force over Rule of Law.

Ok, now we are getting somewhere. With regard to pursuing legal action, see this

http://www.natural-gas.ch/2009/01/04/gazprom-to-sue-naftogaz-ukrainy-with-international-arbitration-court/

How does Ukraine react? It files suit against Gazprom a domestic court of Kiev. Further, Gazprom has no legal grounds on which to continue supplying Ukraine with gas, in the absense of a contract. Hence, there is nothing to "pursue legal action" based on. You see in business, when there is no buy-sell agreement, nothing is bought or sold.

The point is, there is no other way of dealing with the situation. All Russia is asking is for Ukraine to allow in inspectors and to sign an agreement saying they will not steal any gas. I fail to see why Ukraine would not agree to this unless it wants to continue stealing. And stealing is bad!
 

Edward Campbell

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Kirkhill has nailed it, oligarch.

When Canada and the USA have trade disputes - and we have some just as bitter - we go to court. One side rushes to the NAFTA disputes panel and lodges a complaint; the other counter-sues in the WTO.

During a softwood lumber or fishing dispute the last thing Canada and the USA consider is improper interference in the markets of others or, despite the ravings of left wing-nuts like Maude Barlow, cutting supplies of commodities.

The USA is a real tough guy, oligarch, not a puffed up school yard bully, but it doesn't threaten to invade Canada,* it negotiates and waves sheafs of legal papers. The USA is a tough guy, not a thug.


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* At least it hasn't since circa 1903, when Teddy Roosevelt is reputed to have hinted at the possibility as a way of pressuring Great Britain to side with the USA over Canada.
 

oligarch

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E.R. Campbell said:
Kirkhill has nailed it, oligarch.

When Canada and the USA have trade disputes - and we have some just as bitter - we go to court. One side rushes to the NAFTA disputes panel and lodges a complaint; the other counter-sues in the WTO.

During a softwood lumber or fishing dispute the last thing Canada and the USA consider is improper interference in the markets of others or, despite the ravings of left wing-nuts like Maude Barlow, cutting supplies of commodities.

The USA is a real tough guy, oligarch, not a puffed up school yard bully, but it doesn't threaten to invade Canada,* it negotiates and waves sheafs of legal papers. The USA is a tough guy, not a thug.


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* At least it hasn't since circa 1903, when Teddy Roosevelt is reputed to have hinted at the possibility as a way of pressuring Great Britain to side with the USA over Canada.

Okay, provided there is an infrastructure in place to deal with the dispute in the court of law.

The chronology of events as I see it.

-The Ukrainian delegation leaves the negotiation table and refuses to continue negotiations.
-The contract expires.
-In the absense of a contract, the Russian side halts deliveries meant for Ukraine (who in their right mind would continue delivering gas for free?)
-Ukraine steals gas from Russian transit routes meant for Europe to a point where it is no longer able to arrive there.
-Since all the gas meant for Europe is stolen by Ukraine, Russia turns off the gas and lodges a complaint at the Stokholm arbitration court (an international court).
-The Ukrainian side responds with filing a complaint in a Kiev court and refuses for several days to allow EU inspectors, signs a contract with a handwritten addition to referense a text the Russian side has not seen, and overall acts childish.

Well anyway now since the EU has pressured Ukraine to allow in inspectors and to act more civilized, the Russian side said it will resume transit tommorow meant for Europe. It seems to me that it is not the Russian side acting thuggish, but the Ukrainian side having a childish spaz. We are, however, in this part of the world trained to think bad of "those Russians" first before we have any real understanding of the issue.

On a sidenote, I can tell you how these "structures" in Ukraine work. Simmilar things are done today in Russia in... say the air fuels industry. Someone is making money of the fact that gas is sold cheaper. It is delivered to Ukraine, then it is sold, bought, and resold by "middlemen" who never even take physical possetion of the gas to the Ukrainian people at 5 times the price. These are likely friends of Yushenko judging by the way he is acting. But to really appreciate this you have to try living in the FSU.

As for the US, I'm sure if Starsandstripes Corp in the USA refuses to pay Beaver Ltd. in Canada for softwood lumber they will stop deliveries. The conflict between the USA and Canada is about tarriffs, not an unwillingness to pay for a product.

Cheers and hopes to a timely resolution of the conflict!! For the sake of the Ukrainian people I hope their government managed to steal enough gas to last the upcoming negotiations with Russia, because once the EU arrives they will not be able to continue doing so.
 

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Not trying to hijack this thread or anything, but if I could steer it PARTIALLY ofcourse just for a moment...

Are there any current alternatives to natural gas that anybody knows about??  I remember reading in various science & technology articles about the development of synthetic oil - and how it could eventually be used as a replacement for the natural oil that is currently underground.  (Another article on how they were using turkeys & speeding up the compression process millions of times to create natural oil that would not have otherwise become oil for thousands/millions of years.)

What about natural gas though??  I wish I knew more about the technical side of the oil industry...is there any such altnerative to natural gas??  (Looking at this situation, in addition to the one that occurred a year or two ago - just sparked my curiosity.)

Hijack over**
 

a_majoor

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CBH99 said:
Are there any current alternatives to natural gas that anybody knows about??  I remember reading in various science & technology articles about the development of synthetic oil - and how it could eventually be used as a replacement for the natural oil that is currently underground.  (Another article on how they were using turkeys & speeding up the compression process millions of times to create natural oil that would not have otherwise become oil for thousands/millions of years.)

What about natural gas though??  I wish I knew more about the technical side of the oil industry...is there any such altnerative to natural gas??  (Looking at this situation, in addition to the one that occurred a year or two ago - just sparked my curiosity.)

A huge article repository exists right here. As well, MIT's "Technology Review" magazine reports on all kinds of alternative energy ideas (which are duly recycled here as well).

WRT natural gas, synthetic natural gas can be generated from most hydrocarbon sources, either by decomposition (breaking the long hydrocarbon chains into CH4), or forcing hydrogen into hydrocarbons to reformulate it into natural gas. You can use either method with coal, for example.

Syngas can also be created using plasma gassification of ordinary garbage, which is being done in Ottawa.

The big problem with the EU is they have invested heavily in so called "Green" technologies in an attempt to break out of their dependence on imported hydrocarbons, only to discover that this is a niche product, not a viable means of running an industrial or post industrial economy and society. They can invest in syngas production (they have lots of coal and garbage, after all) but in order to do so they will have to overturn a generation of social engineering, and take the risk that Russia might manipulate the natural gas market during the changeover process to reduce the economic viability of Syngas. This, by the way, is the reason that heavy oil, oil sands and oil shale is so slow to market. So long as traditional sweet oil providers can undercut non traditional oils [and it is estimated it only costs Saudi Arabia $5/bbl to pump oil out of their oilfields], then investing millions or billions in production facilities makes no sense.

Europeans were warned that dealing with Russia was dangerous back in the 1980's (remember President Reagan's "Evil Empire" speech?), changing the name from the USSR really didn't change much.
 

a_majoor

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An interesting comparison on how great powers operate. We have seen Russia's actions vis the Ukraine and the EU; compare that to the dispute here.
 

a_majoor

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Is there perhaps another reason behind the cutoff?

http://www.thesurlybeaver.ca/index.php?itemid=616

Out of Gas
01/16/09

EU Referendum has an interesting take on the Russia/Ukraine/EU natural gas fiasco:

The Russian state-controlled gas monopoly Gazprom has now declared force majeure on gas exports to Europe, to insulate it from its contractural agreements, claiming there are "circumstances beyond its control" which are preventing it from meeting its obligations to clients. But Ukraine, straddling the route to European countries, has said that these "circumstances" are simply that the pressure of gas from Russia is "too low."

Now, these fun and games are all very entertaining, but they don't explain anything. The EU member states desperately need the gas, and they are paying top dollar for it. Russia, on the other hand, very much needs the money. And, with the EU monitors in place, there should be no barrier to delivery.

Ukraine is, of course, a "joker" in the pack, but it is somehow not credible that Russia would go to all these lengths to sabotage its neighbour, when the cost to itself is so high. Somehow, the idea that Russia simply does not have the gas to sell is beginning to look more credible, an idea which we looked at here.

Now would be a really good time for Global Warming to make an appearance.
 
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