Progress In Russia/Ukraine Gas Dispute

• January 9th, 2009
• Posted by Daniel Challis

Russian gas company, Gazprom, is set to recommence pumping gas supplies into Europe based on the condition that independent monitors must check the flow to EU markets.

The decision came after lengthy talks in Brussels between Ukrainian and Russian gas executives and EU officials over the impact of the dispute on supplies going through to the West …

COMMISSION FACILITATES DISPUTE RESOLUTION

The talks were designed to end a week-long row between Gazprom and Ukraine’s Naftogaz that has resulted in gas supplies being cut off to Europe.

The European Commission openly condemned the situation between Russia and Ukraine and insisted the two countries’ reputation as reliable partners to the EU was at stake.

“Curtailing of supplies goes against assurances that were given by the Russian government and is not acceptable,” an EU spokesperson said.

President Jose Manuel Barroso said the EU’s gas supply security had been “taken hostage” to negotiations between the two countries and they needed to find a long-term solution to assure a reliable supply.

Talks are continuing as the EU called on both parties to accept independent monitoring of the actual flows of gas through the pipelines.

The Russian president Vladimir Putin said monitors needed to be sent to Ukraine as soon as possible, so gas flow could resume to Europe.

“As soon as people show up there and really sit down and start working, gas will immediately resume flowing,” he told reporters outside his Moscow home.

Ukraine authorities look set to compl, saying monitors could be in place by today.

The Ukrainian President Victor Yushchenko suggested on Wednesday (7.01.09), a commission of representatives from Ukraine, Russia and other European countries could be put in place to examine causes for the crisis and put forth recommendations on normal procedures, as soon as possible.
ONGOING FEUD

Tension between the two countries initially stemmed from a dispute over pricing and allegedly unpaid bills by Naftogaz to Gazprom.

Russia has also accused Ukraine of stealing gas passing through export pipelines on its territory — which Ukraine denies.

WAR OF THE PRESS RELEASES

Gazprom said in a press release on Wednesday that Ukraine had “defiantly rejected international law with no respect to the existing transit contract” by siphoning off Russian gas illegally.

Naftogaz reacted swiftly by filing its own press release saying Gazprom had “once again tried to pass the buck for the stoppage of gas supply to the European countries on Ukraine”.

The company said it was another attempt aimed to mislead the European community and discredit NJSC (Naftogaz of Ukraine).

The conflict has been an ongoing one and revolves around steep increases in tariffs for gas sent to Ukraine since the break-up of the former Soviet Union – adding to generally tense political relations between the two governments.

EU STATES WITHOUT GAS

The halting of gas flow into Ukraine has led to most of Europe being affected by the shortage; many homes have been without sufficient heating as a result.

Countries such as Romania, the Czech Republic, Croatia, Austria and Greece have all reported a complete halt of Russian supplies through Ukraine.

Countries in Central and Eastern Europe have been affected the worst due to their heavy reliance on the Russian gas supply, and the fact they lack the high level of reserves maintained by Germany, France and Italy.

As Winter temperatures dropped to -10 degrees, the dispute couldn’t have come at a worse time for some countries.

The EU relies on Russia for about a quarter of its overall supplies, 80% of which come through Ukraine.

Reference:

BBC News, ‘Monitors key to Russian gas deal’, 08.01.09, http://news.bbc.co.uk/2/hi/europe/7817043.stm, (09.01.09).

EU President declaration, “EU declaration on the Russian/Ukraine problem and energy security”, (08.01.09), http://www.eu2009.cz/en/news-and-documents/news/en_prohlaseni-plyn–5293/, (09.01.09).

European Commission, “Joint statement by Eurogas and the European Commission”, (06.01.09), http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/9&format=HTML&aged=0&language=EN&guiLanguage=en, (09.01.09).

Official site of Ukraine President Victor Yushchenko, “President Yushchenko holds phone talks with President Medvedev of Russia”, (07.01.09), http://www.president.gov.ua/en/news/12528.html, (09.01.09).

Gazprom, “Gazprom has to stop deliveries to entry point of gas transmission system of Ukraine”, (07.01.09), http://www.gazprom.com/eng/news/2009/01/33519.shtml, (09.01.09).

Naftogaz of Ukraine, “NJSC ‘Naftogaz of Ukraine’ indignant at Gazproms OJSC’s statements”, (07.01.09), http://www.naftogaz.com/www/2/nakweben.nsf/0/E78BE97B152CE449C225753700691301?OpenDocument&year=2009&month=01&nt=News&, (09.01.09).

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