Russians Can't Pass Gas?

An update on Russian gas pains.

• The Brussels Journal:
  1. Prominent Estonians Call for Move Against German-Russian Gas Pact

     The idea to thwart the Russian-German Gas Pact by moving the Estonian seaborder in the Gulf of Finland to its maximum extent is catching on. Today, the Estonian daily Eesti Päevaleht – one of the two national quality papers in Estland – devotes a front page article to the joint appeal by former Prime Minister Juhan Parts (Res Publica party, opposition), MP Igor Gräzin (Reform Party, a member of the governing coalition), former Tallinn Mayor Hardo Aasmäe and professor Heiki Lindpere (Professor of Maritime Law, Tartu University) to move the Estonian seaborder to the maximum limit.

  2. Berlin-Moscow Gas Pact Easy to Thwart… if Balts Have Guts

     East European countries regard the Russian-German agreement to build a gas pipeline on the Baltic seabed with misgivings. Though it is far cheaper to build an overland pipeline through Lithuania and Poland, the North European Gas Pipeline Company (NEGP) will directly link Russia and Germany, bypassing transit states. The 1,200 km long seabed pipeline from Vyborg to Greifswald will allow Moscow and Berlin to cut off gas supplies to the countries lying between Germany and Russia if they should ever wish to. This has prompted some to compare the NEGP gas deal to the 1939 Molotov-Ribbentrop Pact.

  3. Schröder Exchanges Berlin for Kremlin

     The former chancellor is not the only German who is going to work for NEGP. Matthias Warnig, the head of Dresdner Bank in Russia, has been appointed CEO of the pipeline company and will become a close collaborator of the former chancellor. Herr Warnig is a close friend of Putin’s. In fact, their friendship goes back to the time that they were both working for the local gestapos of their respective countries. Warnig was a Major in the East German secret service Stasi from the mid-1970s until the collapse of Communist dictatorship in 1989. Putin worked as a KGB agent in East Germany in the 1980s. Warnig was assigned to help him recruit spies in the West.

• BBC:
  1. Putin admits Ukraine gas 'crisis'

     Ukraine says it is happy to pay market rates, but wants price increases to be phased in gradually over several years.
     
     In an apparent concession, Mr Putin said Russia would be prepared to offer Ukraine a loan in the region of $3.6bn to help it adjust to the new arrangement.
     
     "We must give our Ukrainian partners the opportunity to arrange their budget in such a way that it can adapt to market relations," he said.

  2. Russia-Ukraine gas row heats up

     But Russia's defence minister warned that any such increase could have serious consequences.
     
     "The agreement on the Black Sea fleet base is one part of a bilateral treaty, the second part of which contains recognition of mutual borders," Sergei Ivanov said.
     
     "Trying to revise the treaty would be fatal."

• Kiev Ukraine News Blog:
  1. Ukraine, Russia Fail to Resolve Dispute
  2. Dispute Between Ukraine, Russia Heats Up

     A dispute between Ukraine and Gazprom, Russia's state-owned natural gas monopoly, grew more intense Tuesday as Ukraine threatened to take a portion of Russian gas exports to Europe and Gazprom called such a move theft.

  3. Russia Warns Ukraine Against Siphoning Off Europe-Bound Gas

     "Eighty percent of our gas transits through Ukraine, which was the motive behind our Ukrainian colleagues' decision to start to blackmail us ... But we are ready to go to the Swedish court in the event of Ukraine's unsanctioned use of gas," deputy chairman Alexander Medvedev told Channel One television, referring to the Stockholm International Court of Arbitration, which acts as a neutral body for resolving East-West trade disputes.

  4. Gazprom Warns Ukraine: No Contract, No Gas

     Asked whether Ukraine would be able to satisfy domestic demand by using reserves in its underground storages, Medvedev said the natural gas in those reserves was meant for export and that the reserves did not contain extra amounts of gas for the domestic market.

  5. Ukraine Says It Will Not Accept Blackmail, Pressure From Moscow

     Foreign Minister Borys Tarasiuk's remarks were the latest volley in the ongoing feud over Moscow's demand that Ukraine pay more than quadruple the current price it pays for gas imports from Russia. Kiev has refused, saying such a sharp hike would harm energy-inefficient industries and poor consumers.
     . . . . .
     Russia provides almost half of the EU's gas imports, and some 80 percent of that goes through Ukrainian pipelines. The feud has raised fears that these supplies could be interrupted.

  6. Moscow Seeks To Use Petro-Power As Political Tool

     But it is doing so in a highly differentiated way. Ukraine, having shifted out of Moscow’s orbit since last year’s Orange Revolution, has been slapped with the biggest demand for a price increase. Prices charged to Georgia and Moldova, which have also turned their gaze westwards, have nearly doubled. Yet Belarus, loyal to Moscow, is still getting gas at the old price.
     
     Russia is using its dominant position in oil, too, to favour Russian commercial interests. It plans to cut oil supplies to Lithuania from January 1 in what analysts see as an attempt to press the Baltic republic to favour a Russian buyer over rival Polish and Kazakh bidders for the strategically important Mazeikiu oil refinery.
     . . . . .
     Also this month, Russia started construction, with some fanfare, of the $5bn North European Gas Pipeline, an export route under the Baltic sea to Germany that will bypass the Baltic states, Ukraine and Poland. It attracted even more attention by naming Gerhard Schröder, the former German chancellor, project chairman.
     
     Within days, word leaked that Russia’s president Vladimir Putin had asked Donald Evans, the former US commerce secretary and close friend of President George W. Bush, to chair Rosneft, the Russian state-owned oil company preparing for an initial public offering. Mr Evans this week politely declined, citing other commitments.
     . . . . .
     Moscow has already hinted to US officials and international energy executives that it intends to use its coming G8 presidency to assure the world it can be a pivotal energy supplier to Europe, the US and Asia.

  7. Ukraine Gas Dispute With Russia Raises Supply Fear

     Russia in turn accuses Kiev of dragging its feet and refusing to drop the antiquated barter system. Russian officials ask how Ukraine can aim to join the European Union while refusing to pay market prices for gas.
     
     Russia says its interests are purely economic. But Mr Yushchenko's supporters accuse Moscow of trying to damage his popularity three months before parliamentary elections. Mr Yuschenko's party is facing tough competition from Viktor Yanukovich, the pro-Russian politician who ran in last year's presidential race. The elections also give Mr Yushchenko an extra incentive to face up to Russia; his stand has been popular with voters little inclined to pay more for energy.

  8. Ukraine Must Stand Up to Russian Blackmail

     That is why when Russia demands Ukraine to pay twice the price it is charging the Baltic states, that is solely due to political considerations. The Baltic states are protected by NATO and EU and Russia had lost the main means of manipulating there.
     
     Russia is provoked by the Ukrainian temporary vulnerability which enables it to subject Ukraine to various experiments as it is not a member of the clubs mentioned above.
     
     Russian historical tendency to breach agreements represents an issue in any negotiations with this country. German Chancellor Bismarck once said that all agreements signed with Russia are not worth the paper on which they are written.

  9. Yushchenko Accuses Russians Of ‘Blackmail’

     Ukraine has been refusing to accept the price hike by citing a 10-year agreement signed three years ago between Gazprom and Naftogaz Ukrayiny.
     
     A special clause in the agreement, signed last year, fixed prices of Russian gas at $50/1,000 cu m through the end of 2009, while Naftogaz fixed tariffs for shipping Russian gas to Europe for the same period.
     
     Analysts said the clause makes Gazprom legally vulnerable in the dispute should the matter be taken to the Stockholm International Arbitration Court, the venue for resolving the dispute.
     

  10. Ukraine Raises Russia’s Black Sea Fleet Issue in Gas Row

      “We are coming to an understanding that all our economic relations must be in accordance with world, European standards,” Yushchenko told a news conference, when asked about the failure to clinch a gas deal at talks in Moscow on Monday.
      
      “Therefore, when we are talking about the economic essence of leasing Ukrainian ports and land and the temporary stationing of Russia’s Black Sea Fleet in Sevastopol, we are undoubtedly talking about a similar approach.”

  11. CIA Chief Pays Secret Visit to Ukraine

      The CIA has been carefully watching Russia's expansion in the energy sector of the former Soviet Union, including aggressive acquisitions of key energy sector companies, such as power distribution firms and oil refineries over the past several years.

  12. Russia, Ukraine Quarrel Over Gas

      Gazprom is not proposing to raise prices for Belarus, which it charges $47 per 1,000 cubic meters. Russian officials say this price is kept low because Belarus has allowed Gazprom to own a gas pipeline there and to lease the land it uses long-term. Many political analysts, however, attribute the price to the country's firm political alignment with Moscow.
      
      Putin spoke to Yushchenko by phone Friday and said later that they had agreed that the gas dispute should not be politicized, the Russian news agency Interfax reported. "Business and economics is one thing and politics another," Putin said. "Russia was and will be Ukraine's ally."
      
      Ukraine pays much of its natural gas bill in barter by allowing Gazprom to use Ukrainian-controlled pipelines to transport gas across its territory -- about 80 percent of Gazprom's exports to Western Europe flow that way. This gives Ukraine potential leverage in the negotiations, but Yushchenko has ruled out any curtailing of gas to Europe.

  13. Gas Fuels Hotter Russian-Ukrainian Spat

      The dispute is tricky for this gas-dependent country. Ukraine's energy-inefficient chemical factories will cease being profitable if the price rises above $95 per 1,000 cubic meters, and the country's giant metal works will struggle at prices above $103, Security Council chief Anatoliy Kinakh said. Those industries account for 30 percent of Ukraine's gross domestic product and 45 percent of its export earnings.
      . . . . .
      Yushchenko's government is giving as good as it gets. A senior administration official suggested that if Moscow demands "world prices" for oil, it might consider jacking up the $93 million per year that Russia pays to keep its Black Sea Fleet based in the Ukrainian port of Sevastopol.
      
      Russian media, meanwhile, have reported that Ukraine is threatening to open up Soviet-era military installations to the United States and scuttle military cooperation with the Kremlin. Ukrainian officials said they were not aware of the reports.

  14. Ukraine May Host US Radars

      The Russian military establishment is taking very seriously the possibility that strongly pro-American Ukrainian President Viktor Yushchenko could dramatically tilt the balance of global strategic power by giving the United States an advance radar base in the historic former Russian naval fortress of Sevastopol on the Black Sea.
      . . . . .
      IA Novosti said Yushchenko could also retaliate against the gas price hike by refusing to sign a recently negotiated agreement with Russia to extend the operation of its 15P118M missile launchers for Russia`s old but still formidable RS-20 heavy ballistic missiles, known in the West as the SS-18 Satan. Under the agreement, Ukraine agreed to assist Russia in maintaining the systems that have been on combat duty for the past 15 years, for another 10-15 years.
      
      Without that agreement, Russia will have to decommission its existing SS-18s and replace them with new but much more expensive Topol-M ICBMs at an estimated cost of $3 billion-$4 billion, RIA Novosti said.

  15. Russia Threatens Ukraine Gas Cut

      Ukraine has proposed paying market rates - but in phased increases over a period of time, rather than all at once, in the depths of Eastern Europe's bitter winter.

  16. Putin Talks Tough Over Ukraine Gas

      President Vladimir Putin struck a hard line Thursday in a dispute with Ukraine over natural gas supplies, saying that the country could afford to pay the market price for Russian gas.

  17. Yushchenko Sacks Ukrainian State Oil And Gas Company Chief

      Ukrainian President Viktor Yushchenko has dismissed the head of the state-owned Naftogaz oil and gas company, Olexi Ivchenko, his office said, amid a row over gas supplies with Russia.
      

Perhaps a little more carrot and a little less stick would help.