Gazprom to Cancel Gas Discount for Ukraine

[dipsydoodle]

Source: RIA Novosti

GORKI, March 4 (RIA Novosti) – The head of Russia’s state energy giant Gazprom said Tuesday that it will annul its discount on natural gas sales to Ukraine from April, a move that will further stretch Kiev’s teetering finances.

Alexei Miller, who made the announcement while meeting with Prime Minister Dmitry Medvedev outside Moscow, motivated the decision by pointing out that Ukraine is $1.55 billion in arrears on payments for natural gas deliveries.

“The decision that you have taken about canceling subsidies on deliveries seem, in these conditions, perfectly fair,” Medvedev said.

Ukraine’s national oil and gas company Naftogaz Ukrainy had as of February 14 paid Gazprom $1.28 billion for gas delivered last year and had asked to postpone payment of what remained until April 15.

Gazprom said in early February that Ukrainian debt for 2013 deliveries stood at $2.63 billion, meaning that Naftogaz had around $1.35 billion still to pay at the middle of the month.

Read more: http://en.ria.ru/world/20140304/188083296/Gazprom-to-Cancel-Gas-Discount-for-Ukraine.html

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Putin says Gazprom could cut off gas to Ukraine but it would not be due to political factors but because Ukraine hasn’t paid off its debt and isn’t paying for current deliveries:

The government of Russia gave the first tranche of credit, at first stage $3 billion. The Ukraine side promises to pay off debt that accumulated over the past year-and-a-half and to pay the current fees for gas. The debt has not been paid off, and the current fees for gas are not being paid... If they don’t pay for February it will be almost $2 billion that they haven’t paid... It’s just the commercial activity of Gazprom … If they don’t get money on time from Ukrainian partners, then they act according to their own programme, it’s a big problem … It’s not related to political events .... Of course Gazprom will tell them: ‘Guys, this won’t work.’

7 minutes ago here on Guardian live updates : http://www.theguardian.com/world/2014/mar/04/ukraine-crisis-shots-fired-crimea-airbase

[cosmicone]

1. Take THAT neonazis and fascists n/t

[joshcryer]

2. How many you wager this will effect?

[cosmicone]

3. It is plain and simple

Ukraine cannot avoid paying through the nose for its energy supplies and paying back the debt owed to Russia.

If Germany and US want to control Ukraine via neonazis and fascists, they better put money where there mouth is -- in the billions.

It is impossible that Ukraine will be able to stiff the Russians because they badly need the gas.

[joshcryer]

4. This is true.

But you and I both know the gas cut would hit the industry in the east more than anywhere else. What better way to bring Ukrainians together?

[cosmicone]

5. They can cut it off somewhere inbetween

and continue to extend it to the East.

[joshcryer]

6. But that is not what is being proposed.

Now is it?

It would be fascinating if Putin did that.

[Scootaloo]

13. Are you questioning cosmicone's iron-firm grasp of foreign affairs?!

[another_liberal]

7. I'm not so sure that's really how this will work out.

If the gas flow is cut, a lot of people in Ukraine will be damn cold, as well having no jobs to go to. They might see this as caused by their own so-called "Interim Government" and not the Russians at all. One has to remember, until Yanukovich was chased out of Kiev the Russians were more than willing to give Ukraine all the time it needed to pay its debts (and even rack up more).

To expect the Russian-speaking people of eastern Ukraine, especially, to blame their ethnic homeland instead of the illegally installed government now in control of western Ukraine is, in my opinion, a leap of logic at best.

[joshcryer]

8. We'll soon see.

[cosmicone]

9. You're absolutely right

and they watch Russian TV and radio rather than the Ukrainian one. They are fully attuned.

[joshcryer]

10. The majority of Russians are against Putin's invasion...

You do realize Donetsk is the only Oblast that has sided with pro-Russia, right?

[cosmicone]

11. You conducted a poll? N/t

[joshcryer]

12. That would be state owned VTSIOM.

http://en.wikipedia.org/wiki/VTSIOM

http://wciom.ru/index.php?id=459&uid=114720

But I suppose I shouldn't expect people spouting off to be informed.

BTW, the push poll's question?

"Should Russia react to the overthrow of the legally elected authorities in Ukraine?"

[cosmicone]

14. Since the new government is not legally elected the poll is moot. n/t

[karynnj]

16. Thev government referrenced is the OLD government - ie the one

that was overthrown.

[cosmicone]

18. That one was dominated by Russians anyway so no wonder n/t

[dipsydoodle]

15. The $1 billion on the table from the EU

plus the same amount the US has agreed to underwrite will cover most of that still leaving them skint.

Unlikely to reoccur - Gazprom will switch to payment in advance.

I await some bright ideas from the new lot there.

[levp]

17. Don't completely discount

"Live free or die" stance of a lot of people in Ukraine (at least it's Western part).
Now where have I seen that motto before?..

[okaawhatever]

19. Okay, so Russia and Yanukovych claimed the gas discount was in exchange for extending the base

lease. Does that mean the base lease can be cancelled?

I think the gas discount should be cancelled. Let Ukraine pay what the EU does for the gas. Once the transit fees are deducted it will be the same price. Let's also get Russia to sign the energy compact and allow gas from other countries to flow through those pipelines.

[Sunlei]

21. good points, Ukraine can buy gas from one of their many EU friends.

Or go solar and plasma gasification and dump russias gas.

All Russia has to sell (and threaten with) to all the closest EU countries is gas and oil. Russia has a huge land mass full of dinosaur juice.

[dipsydoodle]

26. If you refer to the Crimea base that had already been extended 4 years ago , 2010 ,

and a discount structure was agreed then http://news.bbc.co.uk/1/hi/8635345.stm There have been subsequent agreements since then the most recent being December / reviewable quarterly.

Once the transit fees are deducted it will be the same price ? Hardly - transit fees are about $3 / 1000 cu meters / kilometre. https://www.kyivpost.com/content/business/tariff-for-russian-gas-transit-across-ukraine-incr-310454.html

Aside from that Gazprom make the transit fee payments in advance to Ukraine http://uk.reuters.com/article/2013/06/26/gazprom-ukraine-gas-idUKL5N0F23GP20130626

Allow gas from other countries to flow through those pipelines ? I have feeling you may refer to reverse feeds from Poland and Slovakia, Such feeds may also be are in breach of Gazprom's agreements with those countries. There is no earthly valid reason why Gazprom should allow anyone else to use their pipes - they are not a commercial organisation: not a registered charity.

[freshwest]

29. +1

[Sunlei]

20. Ukraine will trade their "breadbasket" farm economy in the EU market and buy gas from someone else

everbody is fracking gas these days, plus the tundra is melting and gas spews out of the ground.

[okaawhatever]

22. It's likely that is one of the reasons Putin is doing this. Two companies, one Dutch and one

American, I think Exxon, just signed agreements to test for and develop Ukraine's own gas reserves. Doing so would take the leverage from Moscow. The gas issue is a huge part of this. Ukraine is so energy inefficient that they use about the same amount as Germany or France who has 7-8 times the GDP.

Putin wants the pipeline control in Ukraine for himself and Russia. He managed that with Belarus. He wants Ukraine to remain energy inefficient and at the mercy of Russia.

A brief synopsis of latest deal from an energy expert at the Center for Strategic and International Studies.

https://csis.org/publication/ukraine-and-russian-gas-never-ending-crisis

[Sunlei]

23. very interesting link, thank you.

I found this about Ukraine gas pricing interesting. " Currently domestically produced gas is regulated at one-fifth the price of the new Russian gas price or one-eighth the previous higher price"

No wonder Russia (and all their resource/gas investors) want to continue to control Ukraine.

[okaawhatever]

24. The energy situation is much more complex than even that article states. When you talk about

American oii interests you're talking about the corporations making the profits and the politicians they support and who shill for them in return. In Russia about 60% of the government revenue comes from Gazprom/energy sources. It's not about protecting the profits of the stock holders but rather income for the government itself.

[Sunlei]

25. Romney invested in gazprom, hope he's not whispering advice to Putin

All I know about gas industry is my tiny bit of stocks in gas production lease equipment has shot through the roof. wish I got more than just a couple shares to play 'the stock game' with

Romney and Gazprom, Putin (and china too!) https://www.google.com/#q=romney+invested+in+gazprom

[dipsydoodle]

27. Mean while when Sud stream comes on line

Ukraine will effectively be bypassed by Russia. At the point Ukraine would need its own reserves or continue to use to Russia - please themselves.

[joshcryer]

28. I wonder how much scrap pipeline goes for?