Russia and Ukraine Work to Solve Gas Dispute

Russia and Ukraine’s energy ministers met in Berlin, Germany, on Friday to seek an agreement to a long-running gas dispute. European Union Energy Commissioner Gunther Oettinger is mediating the dispute.

Three months ago, the dispute led to Moscow cutting off natural gas supplies to Kiev. Although Ukraine stockpiled supplies, it does not have enough gas for the winter.

Ukrainian Prime Minister Arseniy Yatsenyuk said his country had been unsuccessful at reaching a deal with Russia. He says Ukraine will work with the European Commission to solve the problem.

Yatsenyuk explained why in an energy forum in Kiev last Tuesday: “If we stay united, and if we craft transparent and market based rules, no one, including Russia, will use natural gas as a weapon against our economies and against our countries.”

Oettinger proposed a deal where Ukraine would pay $2 billion to Russia by the end of October and another $1.1 billion by the end of December. In exchange, Russian gas company Gazprom would supply at least 5 billion cubic meters of gas to Ukraine during the winter. Ukraine would have to prepay to receive the gas. Past and future gas prices would be resolved in an arbitration court in Stockholm, Sweden. The proposal also says that the EU would guarantee Ukraine’s debt payments.

Russian Energy Minister Alexander Novak said that the proposal was largely “to our satisfaction.”

Events in Ukraine could affect Europe’s gas supplies. However, they are currently unaffected by the dispute. Analyst Claudia Kemfert said Europe receives around 35 percent of its gas from Russia; roughly half of that goes through Ukraine.

If Russia cut supplies, countries in Eastern Europe would need help because, as Kemfert said, “they are highly dependent and also do not have the infrastructure to change this.”

The Czech Republic’s Trade Ministry said it has fully stocked for the winter and is able to ensure deliveries for up to four months. However, the trade minister cautioned that if Russia closed its taps for more than a month, the Czech Republic would feel it.

Some European countries such as Poland and Hungary have sold gas to Ukraine using “reverse flow” shipments. But these “re-exports” have diminished as the countries prepare for winter. Russia has also stepped forward to prevent it.

Poland halted deliveries last week, citing insufficient supplies from Russia. On Thursday, Hungary suspended deliveries to Ukraine indefinitely, citing the need for technical work to ensure pipeline capacity for incoming deliveries. This just days after Hungary received assurances from Russia’s Gazprom about the abundance of supplies to fill up its own gas storage facilities.

Watch the situation this winter to see how Russia will use this natural gas weapon to influence events.

Realize that Europe’s future will not be decided by what happens in Ukraine or America. Like the Molotov-Ribbentrop Pact prior to World War ii, a German-dominated EU and Russia will conclude a pact to ultimately decide the future of Ukraine and the rest of Europe. For more information on this future, visit the theTrumpet.com archive.