Russia and the Ukraine are getting kinda nasty over this gas issue.

http://www.timesonline.co.uk/article/0,,13509-1963017,00.html

Quote :

"Fears of new cold war as Russia threatens to switch off the gas From Jeremy Page in Moscow PICTURE the families shivering in apartments without heating, factories grinding to a halt, frozen water pipes bursting in the depths of winter. Welcome to the new Cold War. At 10am on Sunday, Russia is threatening to unleash the most powerful weapon in its post-Soviet arsenal: unless Ukraine agrees to a fourfold increase in the price it pays for gas, Russia will simply turn off the tap. Nor is it just Ukraine under threat — the EU imports about half of its gas from Russia and 80 per cent of that comes through Ukrainian pipelines. So when President Putin met Ivan Plachkov, the Ukrainian Energy Minister, in Moscow yesterday, there was more at stake than relations between the neighbouring states. Analysts fear the dispute could provide a foretaste of how Russia will use its massive oil and gas reserves as a foreign policy tool in future disputes with the West. “Energy co-operation has replaced military might as the mainstay of Russia’s international credibility,” Chris Weafer, chief strategist at Alfa Bank in Moscow, said. “It is using its importance as an energy partner to pursue its geopolitical and foreign policy agenda.” The dispute began when Russia, which supplies a third of Ukraine’s gas, demanded that Kiev agree to pay $220-$230 (£128-£133) per 1,000 cubic metres, compared with the $50 it had prviously paid instead of transit fees for gas heading to Western Europe. Gazprom, the Russian state gas monopoly, said it was simply phasing out subsidies that Ukraine no longer needed since the Orange Revolution last year set it on the path towards integration with the EU. The only possible compromise, it said, was for Ukraine to sell part of its pipeline network to Russia. Ukraine said that it was willing to accept a smaller price increase, phased in over five years, but ruled out selling its pipelines, which it sees as a strategic asset. Then things started to get nasty. Aleksandr Medvedev, Gazprom’s deputy head, threatened to cut off Ukraine’s gas supplies at 10am on January 1 if Kiev did not back down. Ukrainian officials then suggested that its neighbour should pay more for rental of the Black Sea port of Sevastopol, where the Russian Southern Fleet is based. Sergei Ivanov, the Russian Defence Minister, said that would be fatal. Yuriy Yekhanurov, the Ukrainian Prime Minister, fuelled the fire this week by saying that Kiev had the right to take 15 per cent of Russian gas shipments to Europe as a transit fee. Gazprom said that would be theft. President Putin proposed a compromise yesterday, offering to lend Ukraine up to $3.6 billion to ease the transition to the higher price. He scolded negotiators on both sides for failing to reach a deal. “You created a crisis not only in the energy sphere. It looks very much like a crisis in interstate relations,” he said. “That is very bad.” But Ukraine rejected his offer. Its officials accuse the Kremlin of trying to punish Viktor Yushchenko, their President, for turning his back on Russia and pursuing membership of the EU and Nato. They also suspect that Moscow is helping Mr Yushchenko’s pro-Russian rival, Viktor Yanukovych, to stage a comeback in parliamentary elections in March. Gazprom, they point out, has raised gas prices for other former Soviet republics, such as Georgia and Armenia, to $110 — and it has agreed to sell gas to Belarus, a staunch ally, for a mere $46.68. But analysts say the reform is not just about Ukraine: it is part of the Kremlin’s broader strategy to gain control of Russia’s energy reserves and export routes and to use them to reclaim its world power status. 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. PAGE TWO Within the next ten years, Russia aims to be at the centre of a spider’s web of oil and gas pipelines feeding all the major world markets. That would be welcomed by countries anxious to meet the growing demand for gas and to reduce their reliance on the volatile Middle East. But it leaves the EU dangerously dependent on a country with a history of political instability and aspirations to reclaim its superpower status. Mr Putin has promised the EU that Russia will not use oil and gas supplies to blackmail other countries. But Mr Yushchenko says that the current dispute proves otherwise, and the EU is under pressure from several members to intervene. Ukraine has enough gas to last the winter — when temperatures can drop as low as -20C (-4F) — if Russia does turn off the tap. “Not one Ukrainian family will be cold in the winter,” Mr Yushchenko told NTN television yesterday. But Ukrainian officials have urged people to conserve energy, just in case."

This just doesn't give me that warm fuzzy feeling that the world is going to be a better place.

[Edited on December 29, 2005 at 10:21 PM. Reason : Bolding some other important sentences]

12/29/2005 10:20:58 PM

I'd be mad too if they left one of these in my country...

12/30/2005 3:27:54 AM

was it just me or did you notice putin playing good cop bad cop... except he was being both....

Quote :

"President Putin proposed a compromise yesterday, offering to lend Ukraine up to $3.6 billion to ease the transition to the higher price. He scolded negotiators on both sides for failing to reach a deal. “You created a crisis not only in the energy sphere. It looks very much like a crisis in interstate relations,” he said. “That is very bad.” "

Good cop

Then the Gasprom comes out and says we want mo money.... cause you like nato.... Which is owned by the kremlin anyway. I found that interesting its like the article tried damn hard to show the russians in a fair light

12/30/2005 9:10:19 AM

Because a special effort is required to show the Russians in a good light. After all, it's widely accepted that the seller of gas cannot ask for any damn price they want.

12/30/2005 2:11:01 PM

Nobody's saying they are legally unable to change the price of gas. What we are saying is that jacking up the prices in the middle of winter is sort of an asshole move.

I mean, the US can cut off its foreign aid to everybody, but the rest of the world wouldn't just sit back and say, "Well, that's their right!"

12/30/2005 2:34:11 PM

Dude, the contract expires. What are they supposed to do?

<offtopic> American "foreign aid" is a deliberate attempt to fuck up other countries to the US geopolitical advantage. </offtopic>

12/30/2005 2:46:47 PM

Yeah... It's not exactly a small increase either. Imagine paying $30 for a tank of gas one week... Then paying $120 for it the next...

That kind of a jump is too large to implement in one day, it would seriously fuck up the Ukraine.

[Edited on December 30, 2005 at 2:49 PM. Reason : Fuck a contract. Russia knows that'll fuck them up, they could deal with a slight compromise.]

12/30/2005 2:47:43 PM

Well, they are democratic now. The free world will help them to pay to the evil totalitarian giant. After all it's not like the Ukrainians hate freedom. Ask them.

P.S. Russia will compromise eventually. On a price that they are satisfied with. But it's good to show a gun first.

[Edited on December 30, 2005 at 2:55 PM. Reason : .]

12/30/2005 2:49:36 PM

omg russia evil everyone else good. Come on people, the cold war is over.

12/30/2005 4:36:13 PM

I agree with MathFreak that Russia will compromise in the end and agree to a lower price. This issue has been brewing for some time now, only now making it to major american media outlets. This is often a common gas business practice in the region and is pretty much expected by all sides.

12/30/2005 4:40:07 PM

russia will compromise... but i like that the ukraine is threatening their fleet, good not to roll over to quickly

12/30/2005 7:00:10 PM

i hope they both lob some nukes and wipe both shitholes off the map.

12/31/2005 1:26:53 AM

Quote :

"Dude, the contract expires. What are they supposed to do?"

I don't have a problem with raising the price. I have a problem with raising the price quite so much, and for political reasons, as it certainly seems.

Quote :

"American "foreign aid" is a deliberate attempt to fuck up other countries to the US geopolitical advantage."

Irrelevant. What I said was that everyone would go batshit if we cut it off, and I stand by that.

Quote :

"The free world will help them to pay to the evil totalitarian giant."

Oh, come on, MathFreak, I would have thought you were above crying and playing the victim. I shouldn't have, though. I've seen you do it before.

Quote :

"But it's good to show a gun first."

In general business terms, yes. But this is one of many cases I would consider special. Russia is already eyed suspiciously by the international community and so takes a bigger-than-normal hit when it looks like she's bullying her neighbors.

Quote :

"omg russia evil everyone else good."

Who is saying this?

12/31/2005 11:35:08 AM

Shit goes down at 2:00 a.m.

12/31/2005 9:36:58 PM

No gas for you!

1/1/2006 5:04:24 PM

1/1/2006 9:10:53 PM

^id throw down with her

1/1/2006 9:42:29 PM

I would give her my oil all night long.

1/1/2006 10:29:32 PM

too bad she got the boot

1/1/2006 11:04:56 PM

speak LOUDLY AND IN RUSSIAN and wave around that big stick youve been carrying!

1/1/2006 11:05:13 PM

Why wouldn't they increase the proce for political reasons? Russia asks Ukraine to pay what many other countries pay. Yes, gas prices are political. In the sense that you get subsidized only if you're a Russian ally. Just a short while ago teh fr33 world celebrated Ukraine saying "fuck off" to Russia. Alright, fine. That decision came with a cost. Which is NOT to pay an unreasonable price for gas (gas from any other source is more expensive), but to get off the Russian welfare program.

If you're so poor that you can't afford heating your own home, then well... you're gonna have to suck dick. I'm sorry to break it to you but that's life. When you're TOTALLY dependent on your neighbor, you should be very careful about how you treat them.

Seriously, at this point I can't really say I fully support Russian decision. Not because it's political, but because I fear it hasn't been well calculated. The economic gains are questionable, but the risks look huge to me. Ukrain steals gas and resells it to Europe, which is totally outrageous. However, it's a small percentage of Russian gas going to Europe. If Europe makes a strategic decision that Russia is an unreliable partner, that will have huge consequences down the road, if not immediately. Risking 98% of your export to save 2% just doesn't strike me as a very bright business move.

And it seems political consequences are even worse. Apparently, the idea is to convince the Ukrainian people that their leadeship are morons (as they certainly are) and affect the outcome of the elections that are coming. Considering how all past efforts had lead to results diametrically opposed to the ones desired, I am not particularly optimistic.

Also, on a sort of moral level, Gazprom is a monopoly and as such would be heavily regulated should it have been an internal situation. When we talk about a foreign country, they cannot apply legal pressure, but they sure as hell have a moral right to use their allies to press Russia politically. I may or may not like it, but it's stupid to deny them that right. That pressure may come in the direction of Russian fleet on Black Sea or elsewhere. Maybe at the end the Russians will get through this mess with a clear victory. Like I said, I seriously question their abilities, and I would consider elevated risks if I could see the end goal. Which I don't.

1/3/2006 5:43:34 AM

Quote :

"Yes, gas prices are political."

Of course, and in some situations that's quite alright, but I hope you'll understand this problem I have with freezing people to death out of spite.

Quote :

"When you're TOTALLY dependent on your neighbor, you should be very careful about how you treat them."

I can't help but have this nagging idea that similar action by the US towards one of its neighbors would be viewed differently by you. But I guess maybe you'd have to overcompensate for what is apparently a rabid, murderous hatred for Russians on here.

1/3/2006 9:43:48 AM

Quote :

"Of course, and in some situations that's quite alright, but I hope you'll understand this problem I have with freezing people to death out of spite."

Except that was never a projected consequence. Ukraine has PLENTY of itw own resources to prevent that from happening. But it's not like you not knowing shit about the situation over there would keep you from liking the sound of yourself typing.

1/4/2006 10:02:12 AM

Apparently CNN is now serving the Russian government. Well, that or they are simply unprofessional and can't see the obvious.

http://www.cnn.com/2006/WORLD/europe/01/04/russia.ukraine.gas/index.html

Here's how their report looks in a nutshell. "First Pearl Harbor happened. Then the war ended." Each sentence is technically correct. However, "minor details" have been omitted that change the whole thing.

Ukraine buys gas from Russia and Turkmenistan. Russian gas now costs Ukraine $230, while the price for the Turkmenian gas is just... $27.5 . Oh, that must mean Russia got a superb deal. If you can sell something identical for 9 times the price of your competitor, it means you're one hell of a businessman.

Oh wait... small catch. Two actually.

1. All Turkmenian gas is owned by... Gazprom. The same Russian company that sell "Russian" gas.

2. Ukraine never signed any contract which would bind it to pay $230 to anybody for anything. The daughter company of Gazprom and some other company who nobody knows, will mix Russian gas with Turkmenian gas and sell it to Ukraine for $95, which is the true new price. Almost double of what it used to be. However, it's nowhere near the level that would justify the hype.

$230 was never a realistic goal. As was mentioned above, the intention was to secure a better price. The consensus in Russia was "better" meant at least $160. That makes the final deal sound like a disaster for the Russians. And the worst thing, we've yet to see what the long term consequences for Russia that I talked about in my previous posts will be.

[Edited on January 4, 2006 at 12:42 PM. Reason : .]

1/4/2006 12:26:29 PM

Quote :

"Russia has hammered home the point that Ukraine is a market-based economy -- it was formally recognized as such by the European Union earlier this month -- and as such says Gazprom has no obligation to continue giving the country preferential pricing for gas."

1/6/2006 2:44:47 AM