Posted by: Mark Scott on January 13
You just couldn’t make this stuff up. Early on Jan. 13, Russian energy giant Gazprom announced it was turning back on the natural gas supplies that transit its Western neighbour Ukraine and provide Europe with roughly one quarter of its gas needs. Yet in a bizarre twist, Gazprom again shut down the supply only hours later after blaming Ukraine for keeping an essential pipeline closed. The Ukrainians responded that Gazprom had changed the transit route for the gas, which officials said had made the reopening of the pipeline impossible. European Union officials confirmed “little or no” Russian gas was arriving through Ukrainian pipelines.
These tit-for-tat accusations have become an almost daily event ever since Russia turned off the taps at the beginning of the year. Even a plan to place EU observers at both ends of the Ukrainian pipelines to monitor the in- and out-flows of gas hasn’t helped solve the problem. Indeed, the European-brokered deal, which had been postponed once already, didn’t deal with the underlying dispute – how much Ukraine will pay for its gas this year. Gazprom wants Ukraine to pay $450 per thousand cubic meter, compared to the $179.50 the country forked out in 2008.
While Russia and Ukraine wrangle over their differences, many Europeans (particularly in the East) have had their gas supplies cut off, or at least significantly curtailed. To make matters worse -- the continent has been suffering from a prolonged cold snap. In response, Slovakia even restarted a mothballed Soviet-design nuclear power plant -- violating a pledge to the EU to decommission it -- to avoid further problems.
No matter who's to blame for this latest gas dispute, it provides further evidence -- if any was needed -- that Europe must diversify its energy supplies. Sure, only about one-third of Russian gas imports are consumed by the hard-hit Eastern European countries (the old EU-15 relies on a broader mix of both energy supplies and generation capabilities), but that is little consolation for 10 of the 12 new EU member states that depend on Russia for at least 60% of their natural gas.
Analysts still believe the Russia-Ukraine stand-off eventually will come to an end, but that won't solve Europe's long-term problems. According to sources, what's needed is a three-pronged approach: 1) increase gas storage around Europe so domestic supplies can cover any future stoppages. 2) Develop an integrated gas pipeline network that would allow supplies to be efficiently pumped around the continent. 3) Create a unified European negotiating position towards Russia that would give smaller countries a larger voice in energy disputes.
These goals remain EU ambitions, though not much – other than extra gas storage – has been accomplished since the last big Russia-Ukraine spat back in 2006. The question now is what will Europe's policymakers do next? Other than harsh words for both sides -- and the installation of pipeline monitors in Ukraine -- Brussels is again missing the chance to take energy policy by the scruff of the neck. Maybe it's time that the European Union took a more proactive approach.
Interesting how the obvious solution - building Nord stream and South stream were left out of the article. Gotta wonder who is playing the games in this fiasco.
those Europeans got no courage to stand up against Russia's rulers. Let them freeze.
There is another side to this story that seems to have been ignored by the media. There have been several creditable reports that the Ukraine is siphoning off gas without paying for it. If someone did that to a US company, we'd cut them off in a minute. Give the russians a chance to be normal business men.
Nick, your point about Nord/South Stream is well taken. Yet the two projects -- which have both pros and cons -- would certainly not help Europe put forward a unified stance towards Russia. Indeed the pipelines are an effort to bypass the Eastern European countries so Russian gas can more easily flow into Germany and Italy (combined, the two EU countries represent roughly 40% of Gazprom's yearly profits).
Nord/South Stream certainly would reduce Western Europe's reliance on Ukraine as a transit country (the country is much to blame for the current stand-off), but neither project helps reduce the continent's reliance on Russian gas.
The fact that the Nabucco Project -- a rival plan to bring Caspian gas through Turkey into Europe, thus bypassing Russia completely -- remains a mere pipe dream (no pun intended) and hasn't secured long-term gas contracts just goes to show much more needs to be done.
In my view it is a provocation of the russofobe-Ukrainian government who thinks they will get the support of the west for it.
I do not understand why should we (Hungary included) have a unified stance toward the Russia?
I understand, the US wants to have Central Asia in its sphere of influence but I do not want it.
Why does Russia have to sell its gas to Ukraine for $179.50 when the market price is $450? I think the Ukrainian President wants to separate Russia and EU.
I understand the desire of the US to break the relationships between Europe and Russia. But comments from North American are the comments of the person who knows nothing about the situation. Just got back from Eastern European countries that are freezing right now. Almost all people I've talked to, convinced that the problem is created by a newly "democratic" Ukraine (and supported by the US). Russians lose big money in this conflict, so it is obvious that Ukraine is the one to blame. But the US newspapers portray it completely differently, therefore shaping a particular opinion in the US. Maybe NorthAmerican does not read other sources news. But that's his problem.
I think the wisest approach for any nation in Europe would be to pursue a multitude of sources for its energy needs, so as to not have a 100% reliance on any provider nation, including Russia and Ukraine, and to have alternatives for the case any one of the sources is shut down. Now, with regards to Russia: In the shortsighted minds setting US policy towards Russia, a "unified stance" can only mean one thing: to corner Russia into accepting unfavorable for itself conditions as an energy provider, a good example of which is the current ridiculous demand to have Russia pay for all of the Ukrainian economy's energy consumption. With this kind of confrontational approach, one can easily imagine that a "unified stance" would result in more disruptions in the future, as the Russians have demonstrated many times that they take no shit from the west, "unified" or not. What the US foreign policy setters are forgetting is that Russia has alternative customers in Asia, and the Russian mindset being semiasiatic in nature - and getting more so every day that passes due to demographics - closing the doors of Europe to them will only result into Russia embracing Asia as both strategic partners and its sole source of political direction.
Increase from $179 to $450 is quite a jump, and nobody seem to notice that Russians also force Ukraine to pump gas to EU at ridiculously low prices of $1.7, simultaneously shouting on all corners that "Ukraine steals gas!", with no evidence to it. At least I didn't find such evidence.
> current ridiculous demand to have Russia pay for all of the Ukrainian economy's energy consumption
In recent years gas price for Ukraine has risen fourfold already (from $50 to $200). As I see it, Ukraine is fighting against further steep price increases.
Also, Ukraine had nothing to do with shutting down EU gas. It was pumping it, and is willing to continue to do so, even at the time when Russia stopped to supply Ukraine itself with gas, since the new price wasn't yet agreed upon.
Russia shut down EU gas flow claiming that Ukraine steals it. Interesting how on Earth Ukraine can do it without EU noticing?
Taking into account the mess in the Ukraine politics, when one hand doesn't know what the other does, I think Ukraine is in charge of the current gas problem.
And Ukraine did close the pipe. When one person from Unranian gaz station was asked why they did not open the pipe, he said that there is no political decision :)
The former Soviet territory always had two troubles: roads and fools. But life goes on, and the list of troubles gets certain national colour. It seems, that in Ukraine now it is necessary to be afraid not only of "fools" and "roads", but “ crisis struggle” and “Euro 2012 preparation”.
http://ua-ru-news.blogspot.com/2009/01/shvonders-struggle-with-crisis.html
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