GasWars: The Empire Strikes Back

[Lvivske]

Deal done, thank you Tymoschenko!

[Lvivske]

Originally Posted by Max_the_Highlander

Soviet Union lost economic war against West like Black boxers lose on the ring against Klitchko brothers.

hahahahah

[Max_the_Highlander]

Originally Posted by Lvivske

Deal done, thank you Tymoschenko!

Yes, we have a sort of happy end… gas will flow to Europe soon.

This is how the deal between Ukraine and Russia arranged is… Ukraine and Russia accept overall European formula of gas price creation. This means correlation with oil price and stock indication with 3-5 months of lag. The price is set for every quarter.

That’s smart because price for gas goes down rapidly so in second half of year it will be two times less.

This will be implemented in 2010. Meanwhile in 2009 Ukraine will get 20% of discount for market level for every quarter and instead Russia will save preferential rate of transit like it was in 2008.

The certain numbers are not published yet since however members of Ukrainian delegation gave them to journalists unofficially and now it’s on TV and in the news.

The average yearly price of gas for Ukraine is… drum roll… 235$ for 1000 c.m. The transit rate is still same, 1.7$ for every 1000 c.m on 100 km.

The contract is concluded since 2009 till 2019. So Ukraine, EU and Russia now have 10 years of quite life.

Transit will be restored within the next few days. However I’m sure Europe will not forget these 12 days of Big Freeze. The changes are about to happen soon.

I predict bigger attention to Ukraine on the West as to ally in new cold war which is about to happen. Because Gazprom proved it’s “not a market player but rather political weapon”. If it shoots, something will shoot in response to it.

[The Big Yin]

Of course resources are weapons the gas monopoly is one of Russia's biggest assets they’d be mad not to use it to play hardball, nothing Russia has done here is particularly unusual or sinister. Trade wars and economic blackmail happen all the time it usually happens in some the more err remote places of the globe so it dosnt get headlines.

[Max_the_Highlander]

There is nothing new in economical pressure but this certain case is outrageously unmoral and violent. Yes we know developed democracies use access for own markets as economical lever. However this is acceptable civilized form of regulation. But we talk about sudden and politically motivated cut off of supply. Cut off of supply is extreme form which is applied to countries suspect in hard crimes like it was in Iraq.

How what crimes are committed by 18 civilized European countries?

Consider following facts. All these countries had valid contracts with Russia about supply and these contracts were broken with no reason. Russia tried to insinuate fault of Ukraine but this failed since EU monitors met Russian obstruction. They intentionally failed agreements with Ukrainian transportation service to have fake explanation of cut off. However real aim was to blackmail EU regarding building of new pipes through Baltic and Black sea and also attempt to present Ukraine as “unreliable”. With further purpose to “secure” it accordingly to Georgian screenplay.

Also you should consider humanitarian consequences of gas cut off in winter time. It’s obvious infamous winter cutoffs of Gazprom which were implemented earlier to Belarus and Ukraine were implemented to Europe this year. Few countries as Bulgaria, Croatia, Moldova, Slovakia, Czech Republic were on the verge of humanitarian catastrophe since they had not alternate suppliers of gas and sufficient stores. Stores of gas in Ukraine were for example 22 billions of c.m.

Today’s dependence of Europe on Russian gas is 25% and it makes 40% of all gas imported. It’s massive share but far not monopoly. Europe can get new pipes from Iran and Azerbaijan and building of Nabucco route is already began. It will be hard to minimize Russian share but they will do it. However I can’t imagine Russians can sell gas profitably somewhere else except the EU. Gas makes 60% of Russian export, it keeps this paltry petrostate afloat. If Europe will reduce Russian share drastically, all this Putin’s construction will break loudly. It seems Russian didn’t realize it yet however they will realize their own dependence on loyalty of buyers and transporters pretty soon.