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Gas conflict between Russia and Ukraine flares

January 28, 2013, 11:07 UTC+3

Gazprom has demanded from the Naftogaz Ukrainy national joint stock company seven billion dollars for gas Ukraine did not import in 2012 as per the agreement with Russia

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Another gas conflict flares up between Russia and Ukraine. Gazprom has demanded from the Naftogaz Ukrainy national joint stock company seven billion dollars for 16 billion cubic meters of gas Ukraine did not import in 2012 as per the agreement with Russia. The Ukrainian authorities have confirmed receiving the account, but said they were not going to pay. Gazprom traditionally refrains from comments.

It has become known that Gazprom officially laid fiscal claims to Naftogaz on Saturday, after the Ukrainian government had signed an agreement on production of slate gas with Shell, the Nezavisimaya Gazeta writes. “This is not a mere coincidence, but a reaction by Gazprom to Ukraine’s attempt to weaken the energy pressure of Russia,” the newspaper cites political analyst Sergei Taran as saying. “On the other hand, Gazprom’s letter has demonstrated that Russia has practically no other lever of pressure on Ukraine but the gas policy,” the expert added.

The essence of the conflict is simple – during Yulia Timoshenko’s time as prime minister the two companies signed a long-term contract, the Komsomolskaya Pravda writes. Under it, Kiev committed itself to buying from Moscow no less than 41 billion cubic meters of gas a year, and if it consumed less it had to pay penalty. Over the recent year supplies have slumped, as since recently Ukraine has been buying gas almost at European tariffs. Last year, Naftogaz bought only 33 billion cubic meters, and naturally it immediately fell under penalty fees for gas it had not imported.

The Kommersant daily cites the head of the Kiev Institute for Energy Strategies Dmitry Marunich Marunich, who believes Gazprom will try not to bring the dispute to court, and now it just makes formal demands trying to strengthen its positions in negotiations on the price of gas for Ukraine and other disputable issues. The expert notes that in 2010 Ukraine imported about 36 billion cubic meters of gas, but there were no claims from Gazprom, which means that these issues “can be also settled politically”.

If Ukraine goes to international court, Gazprom has a chance to lose, as it was in the case with German RWE, which the gas monopoly had tried to make pay 500 million dollars for the gas not imported on take-or-pay conditions, Vitaly Kryukov from Russia’s IFD Capital says. Gazprom lost the case.

Ukrainian experts and politicians interviewed by the Izvestia daily see political connotation in the developments. “The problem must be settled at the level of negotiations between the presidents,” parliamentarian from the Party of Regions Vladimir Oliynyk believes. Besides, he believes that this move by Gazprom is an attempt to make Ukraine join the Customs Union.

According to the newspaper, direct negotiations between Russian President Vladimir Putin and Ukrainian President Viktor Yanukovich have been failing for the past few months. In December, Yanukovich’s visit to Moscow was unexpectedly canceled – supposedly because of Kiev’s unwillingness to join the Customs Union.

Experts interviewed by the Novye Izvestia believe such a row is nothing more but a routine issue for both sides. Sooner or later the sides will reach a compromise.

“Another scandal that will end in some compromise,” independent analyst Dmitry Adamidov commented on the conflict. “And it is clear that it is not gas officials themselves who will be settling it,” he added.

“There are no preconditions for a new gas row,” as gas consumption declines not only in Ukraine, but in Europe on the whole, partner of Greenwich foundation Lev Snykov echoes in a commentary to the Vedomosti newspaper. “Gazprom has a fairly good practice of compromising with Europeans, and this skill must be applied in the case with Ukraine,” he added.


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