Ukraine gas crisis 'could hit EU'

[Stunt]

I realize there has been a thread about this, but the discussion had stagnated and the OP had no comment with the article.

So as it turns out, shutting of Ukraine could have serious consequences for the western european countries. 20% of the EU's gas flows through this region and accounts for 30% of Germany's supply. This company has some serious power and doesn't seem afraid to use it.

I support the commodity's price and $50 per 1,000 cubic meters is just plain crazy...it is unfair to focus these charges on just one country when other countries (pro-soviet nations) are still getting below market price.

Perhaps a gradual increase would have been more apropiate instead of sending a huge shock of 400% into the system.

note:
GAZPROM'S 2006 TARIFFS PER 1,000 CUBIC METRES OF GAS
Ukraine: US$230
Belarus: US$47
Armenia and Georgia: US$110
Romania: US$280
Average EU charge: US$240

Ukraine gas crisis 'could hit EU'
Gas exports to the EU could be hit by the axeing of Russian supplies to Ukraine, officials in Kiev say.
One report said Poland had already detected a fall in pressure in its gas imports since the Russian cut.

Russia's state-run firm Gazprom cut Ukrainian supplies from the pipelines on Sunday after talks failed to solve a politically-charged price row.

Exports to the EU are carried through the same pipelines, and Kiev officials say those supplies are now at risk.

Naftogaz declares such actions unacceptable because they endanger gas deliveries to Europe
Statement from Ukrainian gas firm Naftogaz

"Gas is not flowing at all through some transit routes, which can lead to a fall in pressure in all the pipelines and limit the overall supply of gas to Ukraine and Europe," said Eduard Zaniuk, a spokesman for Ukrainian state-run gas giant Naftogaz.

Ukraine's prime minister has also said his country has the right to take 15% of the remaining supplies in the pipelines as payment for transporting the gas to Western Europe.

Europe's Energy Commissioner confirmed the crisis was causing concern, despute Russian assurances that EU supplies would not be hit.


"The dispute definitely does not help us and keeps us worried because 20% of our gas supplies go through this route, so if there is a dispute so there are eventualities that could come out," Andris Piebalgs told the BBC.

"So we are not too certain if everything will happen as both sides have promised us."

EU governments are convening a meeting of their gas industry experts in Brussels on 4 January to discuss the crisis.

Some EU countries rely particularly heavily on Russian gas. Germany, for example, gets about 30% of its gas supplies through Ukraine.

Polish concern

Polish gas company PGNiG reported that the amount of gas entering its pipeline system from Ukraine was already down, according to the AFP news agency.

"Today at 1100 (1000 GMT), PGNiG was informed by the National Gas Directorate of a fall in pressure at the connection point at the Polish-Ukrainian border at Drozdowicze," PGNiG said in a statement.

"This indicates a fall in supplies originating in Ukraine and is a consequence of the decision by Russia's Gazprom to restrict deliveries of Russian gas to Ukraine."

Kiev continues to insist that the loss of Russian supplies - which amount to 30% of its own national consumption - will not hit ordinary Ukrainian consumers during the harsh winter.

However, it has warned that supplies to industry may be affected.

The Ukrainian crisis erupted after Gazprom announced it was quadrupling the price of its gas supplies from $50 to $230 per 1,000 cubic metres.

Ukraine rejected the increase, saying it was prepared to pay a higher price but not on that scale.

Kiev has said it is currently prepared to pay no more than $80 per 1,000 cubic metres of gas.

Many Ukrainians believe Russia is punishing them for their Orange Revolution and the election of Western-leaning President Viktor Yushchenko.

Other countries which remain in Russia's sphere of influence continue to receive gas at below-market prices.

Source

 

[Tab]

I could have sworn I just read an article that was linked on my Google homepage that stated that Germany wouldn't be hurt by this...

Anyone have an explanation for the sudden increase in price for Urkraine? Has the somewhat recent political turmoil in Urkaine put unease with Russia?

 

[Martin]

Originally posted by: Stunt
I realize there has been a thread about this, but the discussion had stagnated and the OP had no comment with the article.

So as it turns out, shutting of Ukraine could have serious consequences for the western european countries. 20% of the EU's gas flows through this region and accounts for 30% of Germany's supply. This company has some serious power and doesn't seem afraid to use it.

I support the commodity's price and $50 per 1,000 cubic meters is just plain crazy...it is unfair to focus these charges on just one country when other countries (pro-soviet nations) are still getting below market price.

Perhaps a gradual increase would have been more apropiate instead of sending a huge shock of 400% into the system.

While Gazprom may be a company in name, it reality it is simply an extension of Russia's government and their most valuable "soft power" tool. This whole row has nothing to do with prices and business, only politics - Ukraine is no longer willing to be Russia's puppet so Putin is punishing them. They have said they have no problem paying market prices, as long as the increase is done in a graual manner (which IMO is a reasonable position).

Anyway, I hope the EU sides with Ukraine and this blows up in Russia's face, they deserve nothing else.

 

[RichardE]

Maybe a step to a future deal of owning Ukraine's pipe network?

"We will continue cheap gas, but you give us the pipe network"

Russia is number one in the world for gas reserves, so it would make sense to try and obtain a network of gas pipes to a majority of the countries in the EU.

 

[cirrrocco]

Well russia cannot be expected to subsidize ukraines growth and industry when the ukanians in power are rabidly anti russian..the ukranians get cheap gas and sell the by products (fertilizer ..etc ) to europe at a major advantage..

heck gazprom stated that even russian customers dont get gas for 40 bucks ...

ukraine opted for a capitalistic govt and they either need to the market price or shut up..no two ways about it

 

[cirrrocco]

Originally posted by: cirrrocco
Well russia cannot be expected to subsidize ukraines growth and industry when the ukanians in power are rabidly anti russian..the ukranians get cheap gas and sell the by products (fertilizer ..etc ) to europe at a major advantage..

heck gazprom stated that even russian customers dont get gas for 40 bucks ...

ukraine opted for a capitalistic govt and they either need to the market price or shut up..no two ways about it

since most people have only heard abt the gas crisis now..they will be surprised ti knwow that ukraine had agreed to pay market price over a year ago!!!1

==========================

"Next year, Russia will increase prices for its natural gas supplied to former Soviet states. Georgia and Armenia will pay about $110 per 1,000 cubic meters. Russia's original offer to Ukraine was $150 in lieu of $50. In the meantime, Gazprom agreed to pay more for transit services e.g. $1.75 in lieu of 1.09.

Gazprom's resolve to triple the gas prices largely stems from the statements of the Ukrainian government, which declared its readiness to pay for gas on a market-price basis almost a year ago. Now Ukraine's rhetoric has changed. As it turned out, the national steel and chemicals sectors, the main exporters accounting for 30% of budget revenue, will run the risk of finding themselves outside the profit margins if the gas prices range from $90 to $110 per 1,000 cubic meters."

Source

 

[JacobJ]

Originally posted by: cirrrocco

Originally posted by: cirrrocco
Well russia cannot be expected to subsidize ukraines growth and industry when the ukanians in power are rabidly anti russian..the ukranians get cheap gas and sell the by products (fertilizer ..etc ) to europe at a major advantage..

heck gazprom stated that even russian customers dont get gas for 40 bucks ...

ukraine opted for a capitalistic govt and they either need to the market price or shut up..no two ways about it

since most people have only heard abt the gas crisis now..they will be surprised ti knwow that ukraine had agreed to pay market price over a year ago!!!1

==========================

"Next year, Russia will increase prices for its natural gas supplied to former Soviet states. Georgia and Armenia will pay about $110 per 1,000 cubic meters. Russia's original offer to Ukraine was $150 in lieu of $50. In the meantime, Gazprom agreed to pay more for transit services e.g. $1.75 in lieu of 1.09.

Gazprom's resolve to triple the gas prices largely stems from the statements of the Ukrainian government, which declared its readiness to pay for gas on a market-price basis almost a year ago. Now Ukraine's rhetoric has changed. As it turned out, the national steel and chemicals sectors, the main exporters accounting for 30% of budget revenue, will run the risk of finding themselves outside the profit margins if the gas prices range from $90 to $110 per 1,000 cubic meters."

Source

ok...and how much of the russian media is controlled by the kremlin?

 

[RichardE]

http://sympaticomsn.ctv.ca/servlet/Arti...60101/russia_ukraine_gasfight_20060101

Gas was cut off today.

 

[cirrrocco]

Originally posted by: JacobJ

since most people have only heard abt the gas crisis now..they will be surprised ti knwow that ukraine had agreed to pay market price over a year ago!!!1

==========================

"Next year, Russia will increase prices for its natural gas supplied to former Soviet states. Georgia and Armenia will pay about $110 per 1,000 cubic meters. Russia's original offer to Ukraine was $150 in lieu of $50. In the meantime, Gazprom agreed to pay more for transit services e.g. $1.75 in lieu of 1.09.
....................
Source

ok...and how much of the russian media is controlled by the kremlin?
[/quote]

so what if the media was controlled by the govt..will u sell ur ipod for 1/4 market price...or ur brand new home for 1/4 market price..I know i wont..there is no correlation between the media and the issue at hand

 

[Colt45]

I see no reason as to why Russia should be helping Ukraine just because they used to be friends. If Ukraine wants to ****** on Russia, they can't expect to keep the benefits the previously had.

 

[AnyMal]

The real issue at hand is not economical but political. Simply look at tariffs paid by other Russia's neighbours and you can see a clear trend. Those that agree to play seconf fiddle to Russia gets a price break, those who wish to remain independant get slammed with higher cost.

Gazprom is a state monopoly and all decisions are made in Kremlin.

 

[OrganizedChaos]

nobody is forcing the ukraine to buy russian gas. instead of sitting on there hands they could be starting construction on some LNG terminals.

 

[cirrrocco]

Originally posted by: AnyMal
The real issue at hand is not economical but political. Simply look at tariffs paid by other Russia's neighbours and you can see a clear trend. Those that agree to play seconf fiddle to Russia gets a price break, those who wish to remain independant get slammed with higher cost.

Gazprom is a state monopoly and all decisions are made in Kremlin.

This is not a political but an exonomic decision. why should russia subsidize the ukranian industry when they arent allies anymore..

regarding ur statement that neighboring countries pay less. only belarus pays $47, because they are woeking on some type of union

Georgia and Armenia will pay about $110 per 1,000 cubic meters. kazhakastan pays 110. and these countries are allies of russia atleast on the outside. why then should russia sell its NG for a loss to ukraine which has a rabildly anti russian govt in place. politics or not this is the right thing to do..let free market prevail..democratic countries all over the world must embrace capitalism and this move is purely capitalistic😉

 

[DaveSimmons]

Originally posted by: cirrrocco

Originally posted by: AnyMal
The real issue at hand is not economical but political. Simply look at tariffs paid by other Russia's neighbours and you can see a clear trend. Those that agree to play seconf fiddle to Russia gets a price break, those who wish to remain independant get slammed with higher cost.

Gazprom is a state monopoly and all decisions are made in Kremlin.

This is not a political but an exonomic decision. why should russia subsidize the ukranian industry when they arent allies anymore..

regarding ur statement that neighboring countries pay less. only belarus pays $47, because they are woeking on some type of union

Georgia and Armenia will pay about $110 per 1,000 cubic meters. kazhakastan pays 110. and these countries are allies of russia atleast on the outside. why then should russia sell its NG for a loss to ukraine which has a rabildly anti russian govt in place. politics or not this is the right thing to do..let free market prevail..democratic countries all over the world must embrace capitalism and this move is purely capitalistic😉

You say it's not, admit is is, say it's not . . .

Obviously this is politically motivated, especially in refusing to let the Ukraine move from subsidized rates up to market rate in stages.

The Ukraine negotiators agreed to an immediate 60% increase to $80 but because they're no longer acting as a puppet (aka "allies") that wasn't good enough.

 

[Martin]

Originally posted by: cirrrocco
This is not a political but an exonomic decision. why should russia subsidize the ukranian industry when they arent allies anymore..

regarding ur statement that neighboring countries pay less. only belarus pays $47, because they are woeking on some type of union

Georgia and Armenia will pay about $110 per 1,000 cubic meters. kazhakastan pays 110. and these countries are allies of russia atleast on the outside. why then should russia sell its NG for a loss to ukraine which has a rabildly anti russian govt in place. politics or not this is the right thing to do..let free market prevail..democratic countries all over the world must embrace capitalism and this move is purely capitalistic😉

Do you know how utterly ridiculous it is of you to speak of economics and capitalism when speaking of a politically controlled, state-owned monopoly?

A year ago, the state oil company, Rosneft, swallowed up most of Russia's biggest private oil company, Yukos. Then in October Gazprom bought the fifth-largest oil firm, Sibneft. The net result is that the Kremlin now controls 30 per cent of Russia's oil reserves, and all of its gas supplies and pipelines.

http://www.thedailyjournalonline.com/ar....asp?ArticleId=215013&CategoryId=12395

 

[cirrrocco]

are u going to answer my question..!!!!..so ur telling me that venezuela is doing something bad by selling oil to the US at market price because its controlled by the govt..

or norway is selling oil to europe at market price because it is controlled by the govt

or saudi arabia and other ME countries selling oil to other countries at MARKET PRICE is bad..

Tell me is your problem with russia or them selling their oil at market price...what is your problem!!!!

In each of the above cases the company is nationalised..owned by the govt!!!..so lets all stop buying stuff fron them becuuse they are sellig at market price..d u know how stpid that sounds,,,

damm martin pls ask all the countries to stop buying oil frm the middle east..heck the oil is govt conrolled and they are selling at market price..OMG thas bad right...iwe arent supposed to buy anything frm natinalised companies..wow those bad companies are owned by the govt..how sad ..right??

 

[Martin]

you missed the point completely. You contend that Gazprom's decision is based solely on economics, when clearly this is nothing but an order from the Kremlin to punish Ukraine.

Ukraine can't decide to be free market economy one day and be one the next day, it takes lots of time for this to happen. They are not opposed to the increases, but to the magnitude of the increases. So why should Russia offer a gradual move towards market prices? Because what they are doing right now is in effect economic warfare. We will see how the EU reacts on Wednesday, but I am pretty sure that they will not support Moscow.

European Union energy commissioner Andris Piebalgs told BBC....
"Ukraine is definitely not able to pay a four times increase of price. It is just not possible if you pay $50... and the next day you should pay $230. You just can't do it," he said.

http://news.bbc.co.uk/2/hi/europe/4576534.stm

 

[Moonbeam]

I haven't had a gas crisis since I discovered Beano.

 

[AnyMal]

Well, the domino effect didn't take long to kick in. Link

 

[Meuge]

Originally posted by: AnyMal
Well, the domino effect didn't take long to kick in. Link

It's not a domino effect... it's the "let's raise prices cause we can" effect.

 

[piasabird]

You guys need to study economics. You cant raise a price on a commodity too high or it will just be purchased elsewhere. It is possible to price yourself out of business. That might rise the price of oil world-wide, but not as high as they want you to pay. If a country in the EU does this they would get serious penalties fines or even suffer expulsion from the EU.

This might be considered a ploy to get global gas or oil prices to rise to a higher level worldwide. It might work short term, but it would not last forever. The EU surely has some kind of Anti-Trust laws they could enforce.

 

[DaveSimmons]

Originally posted by: piasabird
This might be considered a ploy to get global gas or oil prices to rise to a higher level worldwide. It might work short term, but it would not last forever. The EU surely has some kind of Anti-Trust laws they could enforce.

Russia is a quasi-dictatorship under Putin, his state oil-gas monopoly will just ignore any whinging from the EU.

 

[K1052]

Originally posted by: DaveSimmons

Originally posted by: piasabird
This might be considered a ploy to get global gas or oil prices to rise to a higher level worldwide. It might work short term, but it would not last forever. The EU surely has some kind of Anti-Trust laws they could enforce.

Russia is a quasi-dictatorship under Putin, his state oil-gas monopoly will just ignore any whinging from the EU.

Yep, Putin will eventually have Europe by the nuts since so many european countries meet their heating and electrical needs by using natural gas (a trend that will only increase as the enviro-nazis pressure governments to decomission their nuclear reactors and coal fired plants).

 

[Martin]

Originally posted by: K1052

Originally posted by: DaveSimmons

Originally posted by: piasabird
This might be considered a ploy to get global gas or oil prices to rise to a higher level worldwide. It might work short term, but it would not last forever. The EU surely has some kind of Anti-Trust laws they could enforce.

Russia is a quasi-dictatorship under Putin, his state oil-gas monopoly will just ignore any whinging from the EU.

Yep, Putin will eventually have Europe by the nuts since so many european countries meet their heating and electrical needs by using natural gas (a trend that will only increase as the enviro-nazis pressure governments to decomission their nuclear reactors and coal fired plants).

this precisely why the EU must denounce Russia and come to Ukraine's side. If they don't, Russia will be free to use their gas to pressure them at any time they wish.
Oh and unlike the US, the move in Europe has been (broadly speaking) towards more reliance on nuclear power.

 

[K1052]

Originally posted by: Martin

Originally posted by: K1052

Originally posted by: DaveSimmons

Originally posted by: piasabird
This might be considered a ploy to get global gas or oil prices to rise to a higher level worldwide. It might work short term, but it would not last forever. The EU surely has some kind of Anti-Trust laws they could enforce.

Russia is a quasi-dictatorship under Putin, his state oil-gas monopoly will just ignore any whinging from the EU.

Yep, Putin will eventually have Europe by the nuts since so many european countries meet their heating and electrical needs by using natural gas (a trend that will only increase as the enviro-nazis pressure governments to decomission their nuclear reactors and coal fired plants).

this precisely why the EU must denounce Russia and come to Ukraine's side. If they don't, Russia will be free to use their gas to pressure them at any time they wish.
Oh and unlike the US, the move in Europe has been (broadly speaking) towards more reliance on nuclear power.

Maybe the French and the Finns somewhat, but IIRC there was a lot of sentiment against nuclear power in Europe. The Germans are shutting down their plants and the British public don't seem to want to replace their aeging plants as well.

The opinion in the US has shifted greatly to pro-nuclear in the last couple years with the increases in natural gas costs. Several utilities plan to submit licensing applications for multiple new reactors in the next couple years(the first since the 70's).