Ukrainian - Russian Gas Crisis

Topics: European Union, European Commission, Russia–Ukraine gas disputes Pages: 12 (4135 words) Published: April 6, 2011
Russian-Ukraininan gas crisis


Economic Geography Essay


In 2004, Gazprom exported around 150 Billion cubic metres of gas to 22 European countries. In a Europe of 35 countries, Russian gas accounted for nearly 40% of total imports and 28% of gas demand in that year. All Russian gas exports to Europe (except deliveries to Finland and the portion of Turkish exports delivered via the Blue Stream pipeline) transit through three countries: Ukraine, Belarus and Moldova. Ukraine holds the pivotal geographical position with more than 80% of Russian gas exports to Europe delivered via that country in 2004.

During the 1990s, the Ukrainian/Russian gas relationship was characterised by: • Ukrainian inability to pay for up to 50 Bcm/year which it imported from Russia, leading to very high levels of debt and unpaid bills which led to.. • reduction of Russian gas supplies to Ukraine for short periods of time, aimed at restoring payment discipline which in turn led to..

• unauthorised diversions of the volumes in transit to European countries. From 1991-2000, the details of the levels of debt, the delivery reductions which took place and whether they were justified, and the diversion of gas by Ukrainian parties, became hotly contested issues.

In the summer of 2004, the Russian government, Gazprom and the Ukrainian government agreed the arrangements for delivery of Central Asian (mostly Turkmen) gas to Ukraine and settlement of past debts were agreed. Aside from the financial arrangements, the agreement included a number of other provisions designed to establish more predictability in the relationship over the next five years. A Gazprom loan to the Ukrainian gas company Naftogaz4 allowed it to pay past gas debts, and to provide an agreed foundation for at least five years of deliveries of Turkmen gas and transit of Russian gas to Europe. This agreement foresaw deliveries of Russian gas to Ukraine of 21-25 Bcm/year for the period 2005-09, as a barter payment for transit of gas to Gazprom’s European customers. For this barter agreement – under which no actual money changed hands between the parties – the notional price of Russian gas sold to Ukraine was $50/mcm and the notional tariff for transit of Russian gas across Ukraine was $1.09375/mcm/00km.

By late 2004 therefore, it seemed that the required elements for regularising Russian- Ukrainian-Turkmen gas trade were in place for the next 5-10 years: • Ukrainian debts to Gazprom had been agreed and settled;

• Delivery of Turkmen gas to Ukraine in terms of sales volumes and shipping arrangements had been agreed;
• Sales volumes and prices of Russian gas to Ukraine, and transit volumes and tariffs for Russian gas to Europe, had been agreed as a barter deal. • A consortium of Gazprom and Naftogaz (potentially with German and other European participation) had been founded with the aim of operating and refurbishing the Ukrainian transit pipeline network. Gazprom had long expressed the wish to take ownership in Ukrainian transit pipeline assets. This would have allowed Gazprom control over the network and a way of minimising transit costs and risks.

Till the Russian gasgiant the Gasprom is planning for long-distance, that the build of different pipes in support of the Kreml will catch somehow Europe, the EU-s strategy is just in its early period.

• 1st January, 2006: Russia- because of the debates above the selling price- they locked the gas-main tap to Ukraine. Because of this step the West accused Russia in order to use his power sources as political device • 26th May 2006: The oil was firstly pumped in the Baku-Ceyhan-Tibilis line • 4th October 2006: Russia and Germany agreed, that they will biuld the North Stream pipe under the Baltic-sea • 15th March 2007: Russia Bulgaria and Greece sign an agreement about the Burgas-Alexandroupolis oil-pipeline • 29th April 2008: Russia and Greece sign an agreement about the South...
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