Russia prepares to cut gas to Europe

[lovuian]

http://feeds.bignewsnetwork.com/?sid=ff833c696115d63d

Ukraine and Europe braced for Russia to cut off natural gas this weekend after Kiev rejected a nearly five-fold increase in the commodity's price.

Moscow-controlled OAO Gazprom informed Ukraine recently that the cost of its natural gas, which is piped into Ukraine on its way to western Europe, will rise Sunday from $50 per 1,000 cubic meters, a price still paid by Kremlin-compliant Belarus, to $230, The New York Times said.

Ukrainian President Viktor A. Yushchenko agreed to pay more but said his young democracy cannot immediately afford such a dramatic price hike. He appealed Friday to Gazprom to keep talking about how to gradually bring his nation's fuel bill into line with those paid by Western European countries instead of shutting down the pipeline that feeds Ukraine and Western Europe

more...

This is what happens to countries depending on oil they get jerked around with...

[SpiralHawk]

1. The Fuel Wars

coming soon to a home heating appliance, and a gas tank, near you.

Thanks in large part to the Neo-Con Oil republican BushCo cabal of corrupt cronies.

the only way to come out ahead in this war is to use the Solar Ray.

[lovuian]

9. Pravda's take on it

http://english.pravda.ru/world/20/92/370/16695_Ukraine.html

Ukraine to steal Russian natural gas 'legally'
12/30/2005 10:42
No wonder the last offer to Ukraine was based on the same price formula as that used for European customers

These days Russia and Ukraine do not seem to be any closer to reaching an agreement in the talks on the natural gas prices than they were a month ago. Today the Ukrainian side insists on a new way of offsetting its services for the transit of Russia's gas supplies to Europe.


more...

The Spice must flow...

[occuserpens]

2. Not exactly

Ukraine almost certainly will be shut off, but not EU. Russians just don't want to give gas discounts to Ukraine any more. So, everything will be OK - unless Ukrainians will take European gas.

[lovuian]

3. and how will the Europeans know if the Ukraine takes their gas???

Its definitely a dilemna if Ukraine shuts the pipeline down...

[occuserpens]

7. Simple

Russians will go on pumping the European gas through Ukrainian pipelines. So, whatever Ukrainians will take, Europeans will lose.

[no_hypocrisy]

4. Wow, those communists really have learned about free

market principles in a little time, haven't they?

[CHIMO]

5. Russian-Ukrainian Gas Dispute May Affect Germany

The fractious row between Moscow and Kiev over gas prices could have serious implications for Western Europe, which depends on Russia for 80 percent of its gas imports. It could hit Germany hard too.

On the surface, the atmosphere at E.ON Ruhrgas, Germany's largest gas importer, is relaxed. The gas giant's top management is, as is the case in most companies at this time of year, on holiday and even the press office is thinly-staffed.

But beyond the calm façade, E.ON Ruhrgas must have its sights firmly on a turbulent dispute unfolding in Moscow and Kiev. For months, the two sides have been wrangling about new pricing for gas supplies and transit rights.

Russia wants Ukraine to immediately begin paying world market rates for gas it receives from Russia, instead of the highly subsidized price charged at present under a barter system left over from Soviet practices.

http://www.dw-world.de/dw/article/0,2144,1839484,00.html

Welcome to "Real Politics" Merkel.

[occuserpens]

6. (nm)

[lovuian]

8. Well said Chimo... and wait till gas skyrockets...

Germany is more prepared for this than we are but its still going to hurt...

[eleny]

10. Thom Hartmann was talking about Germany the other day

He said that Germany is encouraging the installation of solar power by the German people. Not that this is directly related to this natural gas issue. But Thom said that he was in Germany a few weeks ago and saw solar panels all over.

Germany is giving low interest loans so people can afford the panels. The loans are for 10 years and the panels are supposed to last 50 years. They're trying to get as energy independent as they can. Clearly, they understand the position they're in and are trying to do what they can to deal with it.

[Ouabache]

11. any chance this is a russkie squeeze to stop *war on Iran?

What does this do to oil markets worldwide as we get the reports, especially out of Germany, that *war on Iran may be coming in 2006? Any chance that this happening would force Europe to do something to stop *war on Iran? I think it is a possibility, but can't give a good reason other than Europe might then increase demand on other world supplies to counter this Russian move which might convince the neocons that they can't carry forward on Iran bombing plans?

[ladjf]

12. Russia is heading toward a dictatorship. Putin knows that the

U.S. won't stand in his way since BushCo also intends to establish a fascist dictatorship in America. They plan to split the profits while hoping that China won't get to upset about it.

[Whoa_Nelly]

13. Will this effect the world trade re: NG?

Am not a market or trade person. Yet it seems that something this drastic can have a ripple effect to an even greater extent than is already happening.

Slap me down at any time if I'm out-to-lunch on this. Would honestly like to understand this aspect better.

[cliss]

14. Gerald Celente wrote in his book "Trend Tracking"

that "wars will be fought and won over oil". Those who have it will reign supreme, and those who don't will be in desparate straits.

And that's exactly what we're seeing now.

[Psephos]

21. Celente's right

but it's not news that humans fight each other over resources. Always have, always will, unless/until something gets edited out of our DNA.

Peace.

[occuserpens]

15. Putin orders gas supplies to Ukraine in 2005 prices in Q1 if new contract

http://en.rian.ru/russia/20051231/42809726.html

[occuserpens]

16. Did Yushchenko wink - or this is just Rian glitch?

All other sources do not confirm this development!

Urgent: Ukraine agrees to market prices for Russian gas: http://en.rian.ru/world/20051231/42810517.html

[Yo_Mama_Been_Loggin]

17. Wonder if that will have a ripple effect here?

Right or wrong the oil companies use any excuse to raise prices.

[lovuian]

18. YoMama that brings up a interesting point... is this going to

affect OUR prices???

[occuserpens]

19. No

Russians just want their world prices for their gas.

[occuserpens]

20. Yushchenko gives up or bluffs?

Now there are two variants:
-- Yushchenko finally agrees on Russian terms.
-- He bluffs. There is no deal, he just wants to put more Western pressure on Russia.

Rian. Ukraine agrees to market gas prices but wants figures: http://en.rian.ru/russia/20051231/42810592.html

[lovuian]

22. Russian gas cut 'will not hit EU'

http://news.bbc.co.uk/2/hi/business/4568288.stm

Russian energy giant Gazprom has renewed a threat to cut off gas supplies to Ukraine - but says it will not hit deliveries to western Europe.
Moscow and Kiev are holding talks over Gazprom's decision to quadruple prices.

Ukraine's President Viktor Yushchenko called for the price to be frozen until 10 January while talks continue, but Gazprom reportedly rejected the offer
more...

I don't know how Russia's going to pump gas through the pipeline and not give Ukraine any... ???talk about a dilemna...

[occuserpens]

23. Gas crisis: who bluffs?

So, now we have three variants:
-- Rian bluffs, their version of the events contradicts all other sources!
-- Yushchenko finally agrees on Russian terms.
-- Yushchenko bluffs. There is no deal, he just wants to put more Western pressure on Russia.

1. Rian. Ukraine agrees to market gas prices but wants figures: http://en.rian.ru/russia/20051231/42810592.html
2. AJ. Ukraine rejects Russian gas deal: http://english.aljazeera.net/NR/exeres/75163C3B-7F0B-40E4-B8CD-7BF3BC8D12B8.htm

[occuserpens]

27. n/t

[muriel_volestrangler]

24. They reduce the pressure going into Ukraine

and the difference in the flow going into and coming out of Ukraine will show whether Ukraine has reduced its consumption by the equivalent amount. BBC radio said the pressure going into Ukraine has been reduced by about 20%, I think (or that might have been a pressure reduction equivalent to 20% less flow).

Russian gas supplies account for about 30% of Ukraine's total consumption.

The loss of those supplies will be a real problem in winter, says the BBC's economics correspondent Andrew Walker.

Ukrainian gas industry officials say heating needs can be met from other supplies, but industrial customers might face reduced supplies, he says.

http://news.bbc.co.uk/1/hi/world/europe/4572712.stm

If Ukraine doesn't reduce its consumption, western Europe will presumably complain to them - and there must be contracts which allow commercial pressure to be put on each government.

[rfkrfk]

25. the issue is, can NG get to the EU, some other way

I read somewhere, that 80 percent of 'Russia to EU' gas {currently}
goes thru Ukraine

any gas going thru Ukraine, --> they can take
as much as they want, I guess

[amandabeech]

26. Germany and Russia are laying a huge pipeline under the Baltic

Sea, bypassing former Soviet Union countries and eastern European countries like Poland.

There has been some talk of building a pipeline through Belarus, but that would have to go through Poland to get to Germany.

A friend of mine maintains that the Ukrainian Constitution permits eastern portions of Ukraine to secede. Eastern Ukraine, including the heavily industrialized Donets basin, contains a large proportion of ethnic Russians. If my friend is correct, the Donets industrial region could secede, join Russia, and solve its natural gas problems.

Another side of the issue is the Ukrainian demand that Russia pay market rates for the rental of the Russian Black Sea Fleet's Odessa home port. Odessa is on the western Black Sea coast of Ukraine.

There's a lot going on here, and I don't presume to know all of it.

[occuserpens]

28. Russia Today

video feed: mms://polar.rttv.ru/rttv

[amandabeech]

29. Sorry, my current dial-up connection doesn't allow me to watch

video feeds.

[occuserpens]

30. Well :-(

[daleo]

31. Right now Russia is selling natural gas to Ukraine at 20% of world price

Normally, the western press would call that anti-competitive "dumping". It is interesting how the principles of neo-liberal economics go out the window, when a global power politics come into play.

[amandabeech]

32. Ukraine maintains that the $50 price was negotiated and memorialized

in a contract modification signed in 2003. In the contract, Russia pays below-market fees for transport of its gas through Ukrainian pipelines. Russia claims that the price must be negotiated every year.

If Ukraine is right about the contract, then Russia looks incredibly stupid. In the west, suppliers get very bad reputations when they break contracts. Unless this contract dispute is submitted to arbitration and differences worked out reasonably, the Europeans will not be amused even more than are already not amused.
Every country save a handful in Europe are depending on Russia, and Russia here is not looking very dependable.

It will be interesting to see (i) if the Russia-Germany Baltic pipeline gets stalled, (ii) Europeans start pouring money into LNG suppliers in other parts of the world, (iii) whether some European countries rethink their views on nuclear power, and (iv) Europeans suddenly become more interested in helping Iraq recover from the U.S. occupation and the Saddam embargo.

I just posted an article from the Guardian, yes, the Guardian, concerning reports on Iranian nuclear weapons issues and the article was not facetious. The Europeans could shove it in Russia's face over Iran. After Russia, Iran has the largest natural gas reserves. Contemplate the possibilities.

[daleo]

33. I would like to see this contract

This ought to be easy enough to produce. Russia and/or the Ukraine should post a copy of it. The fact we haven't actually seen it yet makes me wonder. No doubt the language is vague enough for everyone and they may not have a dispute resolution mechanism anyway.

Bush and the rest of the U.S. government has ignored the NAFTA agreement about softwood lumber for years, including several judgments by the dispute resolving panel which have ruled in Canada's favor. When it comes right down to it, the much larger partner in an international agreement has an overwhelming advantage, reputation or no.

I think the Europeans most sensible long range response would be to increase efforts at energy independence, such as solar, wind, etc. That may include nuclear as well, although I don't know how secure their supplies of uranium are. It would make sense to want to diversify their suppliers with offshore LNG and the like as well.

I don't think they would see much point (privately) in helping the U.S. in its hegemony over Iraq or Iran. That would just trade being at the mercy of the Russian energy monopoly to being at the mercy of an emerging U.S. monopoly.