Russia to Cut Off Natural Gas Pipeline to Ukraine

Personally I am curious why nobody proposed an angle of Ukraine deliberately provoking such a situation to win some European support and run down Russia's credibility.

According to an agreement made in 2004 Ukraine was getting it's gas for $50 per 1k cubic metres. at the same time Russia paid for transit services at $1.09 (in gas) per every 1k c/m transported. So that meant that Ukraine was getting 1/6 of all transported gas in transit charges alone. Furethermore regardless of the "free market" price above $50 that proportion remained the same: 1/6th of all transported gas.

Now since Ukraine pays for it's gas with transit service that means they are essentially free to take as much as they want. and if they divert "European" gas, they can simply say that they have taken what belongs to them and any issues should be taken up with Russia. from a legal point of view they will be in the right whilst doing so. So when they went ahead and "nicked" an unusually large quantity of gas that was destined for Europe, they simply pointed a finger at Russia.

Another thing is the whole contract is actually pretty non-profitable for russia and extremely lucrative for Ukraine, yet Ukraine is the one initiating the calls to "re-consider" the contract. Can Russia be blamed for siezing the opportunity, that I am sure any half-decent businessman would?

So in my humble opinion either Ukraine provoked the whole thing or they simply made a really big f***-up. to blame Russia's desire to get itself out of a really poor business deal they had before this, is well... simply hypocritical and biased to say the least.

Originally posted by sminkeypinkey
Well so far I think the one element that looks 'iffy' is the damage to the supply lines (but it could have been anyone, there is no proof either way and it is still far from clear who was responsible for that).

If presidents of some countries are claiming that you really have no business talking about no proof. WE might not have it but i am sure THEY might very well have.

They have freely chosen to have less and less to do with Russia politically and are moving ever towards 'the west' (or what they imagine to be 'the west', along with a little outside encouragement, no doubt).

Much outside encouragement as much of the unrest were funded by the same old US backed organizations. Nothing new under the sun.

Then they get upset when Russia asks they move to a 'western price' for Russia's resources.

Well they called it the open manipulation that it was as Russia waited for a particular cold spell to hit them with the bad news. Strange that Ukraine had enough in stock and that Europe suffered more thought.

I cannot see why anyone thinks this is unusual; if you don't want to be in the 'Russian club' why would you expect any of the benefits that 'membership' once attracted?

One assume they had a deal going and it was broken at a time they did not expect? You are however right in the main and they should not be expecting undeserved favours. My point was why did Russia wait so long if not for many reasons other than the one's you suggest here.

If they were trying to charge twice what they charge Europe or something one might have a point but they are merely asking those countries that want to 'move away' from Russia to move to paying the same prices as Europe.

Wich has very little to do with my original point. It's all about timing and the timing was interesting to say the least.

Also complicating this matter is the current unusual extremely cold snap Russia is experiencing. This has led to Russia to look to Russia first and keep their supply priority up at home first.

Assumption or fact? No reason to try find excuses for obvious and deliberate Russian actions imo...

But - contrary to what some seem to imagine - this is not the first time this happened and when the ultra cold spell was over supplies returned to normal.

It certainly did not have anything to do with a cold spell this time. The Ukraine did not sign up to a new deal that would keep price the same for the first 3 months so their gas was cut deliveries were cut off.

Ukraine's prime minister denied the allegation, insisting not a single cubic metre of Russian gas was being used.

Earlier, Ukraine's own state-run gas firm blamed Russia for jeopardising Western European supplies.

"Gas is not flowing at all through some transit routes, which can lead to a fall in pressure in all the pipelines and limit the overall supply of gas to Ukraine and Europe," said Eduard Zaniuk, a spokesman for Ukrainian state-run gas giant Naftogaz.

"Naftogaz declares such actions unacceptable because they endanger gas deliveries to Europe."

Ukraine gas row hits EU supplies

Interesting how the focus of all of this has shifted from a terrible (deliberately? threatening?) Russian made 'European crisis' - a tale completely unsustainable in the light of the facts.

And here i thought we were staying open minded! There are enough people who sees this as the deliberately manipulation it seems to be for me to continue looking at it in that light.

- to implying nasty old Russia is bullying those poor little countries (that have dared to 'stand up to them' or who 'want to be free' etc etc and all those other cliches), no?

Well Russia is clearly using it's energy sector power to affect political and economic compromise so how can you not call it "bullying"? Since when is Russia incapable of doing what is in it's best interest anyways? They are not much less of a superpower than they used to be....

Stellar

[edit on 5-2-2006 by StellarX]

Some interesting detail I just found regarding the Russia/Ukraine gas war.

Kommersant: The Miller Cocktail


No one could expect the gas war between Russia and Ukraine to end in this way. The acutest economic crisis of 2005 did not freeze Ukrainian villages or brought German plants to a halt but enabled RosUkrEnergo (RUE), the gas trader with the turnover of billions of dollars, to enter the European gas market bringing profits to its unknown co-owners.

[---]

The agreement between Naftogaz Ukrainy, Gazprom and RUE was sealed at Gazprom’s headquarters at 2:30 a.m. on January 4, according to the information Kommersant obtained. The final decision was taken before the midnight at Ukraina Hotel during talks between leaders of all the parties concerned including the businessman Semen Mogilevich who set up RUE in 2004, unofficial sources reported. Shareholders of this offshore company which is registered in Swiss canton Zug will reap revenues as early as in 2006.

Yulia Timoshenko, the head of the Yulia Timoshenko Bloc, revealed at the news conference in Kiev the agreement, whose authenticity was not refuted by Gazprom or Naftogaz Ukrainy.

Mogilevich:

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Yulia Tymoshenko:

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***

I bet Tymoshenko and Mogilevich are not so good friends. Maybe that's the reason why she's currently not in office?

Did anyone read my post above at all? Alright, whatever... I'm such a crybaby, I know... Further investigation reveals that there is not enough evidence of Mogilevich involvement in RosUkrEnergo. Only "indirect evidence". And Yushchenko (who sacked Tymoshenko) forbade anyone to "deal with it"...

Kommersant: The Fight for Power


At the same time, former Ukrainian authorities made other accusations against RosUkrEnergo. On June 21, 2005, former head of the Ukrainian Security Service Alexander Turchinov stated that part of the assets of the company are personally controlled by former Ukrainian president Leonid Kuchma. Turchinov said that the supply plan for the company was devised by Kuchma and former prime minister Viktor Yanukovich to “insure their positions and economic control over the country.” Turchinov suggested that Kuchma then sold his share in the company to Gazprom employees close to Russian President Vladimir Putin. He also said that Yushchenko knows about that, but forbade him to “deal with it.” Since July 27 the former security service head has stated several times that Gazprombank's share in RosUkrEnergo is controlled by businessman Semen Mogilevich, who was convicted of embezzlement twice in Russia and is now wanted by the FBI on charges of embezzlement and money laundering. However, Turchinov said, the Ukrainian Security Service has only indirect evidence of Mogilevich's involvement in RosUkrEnergo.

Sorry Helmutt, missed this.

One year on and things look so different, eh?

I'm still watching this story with some interest.

The UK just opened a new vast gas line (one of the longest in the world) connecting us in to Norway's production.
That (and a handful of other brand new major pipelines) should end the recent worries about the UK's security of supply for some time.

As for Russia?
I expect various ex-soviet states around the Russian rim to pop up from time to time with this type of dispute (and others).
Not least because such distracting dissent is being encouraged by 'you know who' in their own quest to dominate various energy markets.

Here's more from the BBC. Yulia Tymoshenko says Mogilevich is behind RosUkrEnergo. Gas from Russia to Europe might get disrupted again...

BBC: The High Price of Gas: Transcript (Panorama)

6 November 2006


YULIA TYMOSHENKO: When I was the Prime Minister, we provided the President of Ukraine with documented proof that some powerful criminal structures, are behind the RosUkrEnergo company. I can only say as a politician: we have no doubts whatsoever that the man named Mogilevich is behind the whole operation called RosUkrEnergo.

[---]

JONATHAN STERN: What happens ... if RosUkrenergo breaks up because there are some problems of governance, or some problems of alleged mafia connections, that could eventually disrupt gas supplies, and that's what we should be concerned about.

STEVE BRADSHAW: Gas supplies to?

JONATHAN STERN: That could disrupt Russian gas supplies to Europe. That's why we need to be concerned about it.

Mogilevich seems to run everything now. Since he has so much power, I say he should run for office in a bigger country. Mogilevich for Russian President!! Putin will be proud.

Originally posted by maloy

Mogilevich for Russian President!!

Why am I not surprised?


At least Putin is not wanted by the FBI...

SBU warned in advance (August 2005) that Ukraine might expect serious gas supply problems in November-December. This happened after the SBU's files on Mogilevich were mysteriously destroyed.

Eurasian Secret Services Daily Review

23.11.2006


Destruction in the SBU of the files of Simeon Mogilevich's so-called case, that was connected with the emergence in Ukraine of the RosUkrEnergo company, also could be a well executed task of intelligence, NTN adds. According to Ivan Gerasimovich, the Deputy Chairman of the SBU, destruction of Mogilievich’s materials has damaged Ukraine’s interests. In August 2005 the SBU, that was investigating the affair, warned that in November-December Ukraine might expect serious problems connected with gas supply.

Yes, he is indeed powerful... To be able to get these files destroyed.

...Now he is arrested. For tax fraud. Happened last week and posted in another thread, but for those who missed it, here's Russia Today on Mogilevich's arrest.

He has more than a dozen names and is reputed to be the godfather of the Russian Mafia. For 15 years Semen Mogilevich has played a cat and mouse game with the world's intelligence services.

RosUkrEnergo has not delivered gas to Ukraine since November 2007, according to Yulia Tymoshenko.


Regnum: Timoshenko: Since November 2007 gas has been supplied to Ukraine by Naftogaz only

EU Gas Supplies At Risk

Gas supply to EU is at risk again. Unless Ukraine settles its "debts", Russia might reduce the gas supply to Ukraine starting tomorrow...


Guardian: EU gas supplies at risk if Ukraine does not settle bill with Russia


Siloviki faction hiding Mogilevich...


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Here's another twist to the Ukraine gas crisis. Maybe Gazprom is simply running out of gas?


TIME: A Gas Ultimatum for Ukraine


Running out of gas... oops...

"Russia Declared Another Gas War to Ukraine"

And now they are running out of money. Another gas war between Russia and Ukraine?


Kommersant: Russia Declared Another Gas War to Ukraine


$2.4-billion!

Russia might cut the gas supply to Ukraine on Thursday, if they fail to pay their huge debts to Gazprom. Whether gas supplies to Europe will be interrupted because of this, is not clear.


RIA Novosti: Gazprom sets up action group to start gas cuts to Ukraine

reply to post by Hellmutt


Of course supplies to European countries further down the line will be affected. Ukraine will siphon off their share just as last time.

EU should really exert some pressure on Ukraine to pay up. They have the money, as proven by Timoshenko's last ditch efforts at negotiation.

It also looks like this issue will exacerbate the conflict between Timoshenko and Yuschenko.

en.rian.ru...

Have Friends in the Ukraine, they told me its due to the fact that the Ukraining gov't hasn't paid them for gas already used *2.4 billion*, as they explained it to me, it was the Corrupt Ukraining gov't that siphoned that money into their greedy pockets, and of into foreign banks, that money which came from taxes collected in the Ukraine went straight to corrupted hands.

Keep in mind, this info is from the Ukraining Folks living there.

Fox

[edit on 12/31/2008 by FoxStriker]

Originally posted by FoxStriker
Have Friends in the Ukraine, they told me its due to the fact that the Ukraining gov't hasn't paid them for gas already used *2.4 billion*, as they explained it to me, it was the Corrupt Ukraining gov't that siphoned that money into their greedy pockets, and of into foreign banks, that money which came from taxes collected in the Ukraine went straight to corrupted hands.

Exactly. It is not like there is no money in Ukraine to pay for the gas - it is that the money is not going where it should.

Think about it - much of the Russia's gas supplies to Ukraine go to private companies and consumers through Ukraine's own gas company. These customers pay for this gas, and the Ukrainian gas company receives these payments. Technically these payments should go towards paying Russian Gazprom, but instead the money are lost in Ukraine's web of corruption.


This amounts to nothing more than an act of theft by Ukrainian corrupt politicians and oligarchs. And when their gas gets cut off on Thursday, Ukraine will not be stealing from Russia but from their European neighbors to the West.

BBC: Russia shuts off gas to Ukraine




Ukraine will now instead pay European market price for gas.


KyivPost: Gazprom CEO: Ukraine will be charged market price of $418 per 1,000 cubic meters

Again... Mogilevich...


Russia cuts off Ukrainian gas supply