Map of European natural gas pipelines. Credits: BBC, Petroleum Economist.Putin ordered Russian hikes for the price of gas in 2005/6, but not in 2006/7 when Russia’s stooge Yanukovich was Ukraine’s Prime Minister. Now when Tymoshenko is PM, cash-strapped Gazprom wants the Ukraine to pay market levels for gas, $450 per thousand cubic meters (mcm), basically to punish Ukraine for electing a Nationalist Government under Yushchenko and Tymoshenko and for demanding that the Russian Navy leave Crimea by 2017 as per signed agreement.
Ukraine returned the favour and hiked the TRANSIT cost of Russian gas going through the Ukrainian pipelines heading for Europe. Russia pays only $1.6/mcm/100 km for transit, or less than half the average European rate while Slovakia charges upwards of $4/Mcm/100 km for transit through its gas pipelines and only pays $270/mcm for its gas. Russia thus demands the European rate for its gas from Ukraine—while paying half the European rate for transit of its gas through Ukraine, and when it doesn’t get its way it cuts off supplies to Europe. Well, two can play at the hike game. Learning the lesson of Russia’s behaviour, the Ukraine has stockpiled 6 months of gas supply reserve for its own use in underground caverns.
Russia refuses to pay the increased TRANSIT cost and turned off gas using as a lame excuse the unverifiable accusation that the Ukraine was stealing Europe's Russian gas supplies through Ukraine—the Russian media is blasting the latter story throughout the world.
In reality, Russia is hoping to push the benefits of an under the Baltic NORDSTREAM gas pipeline bypassing Belarus in the north and then later a SOUTHSTREAM gas pipeline under the Back Sea bypassing the Ukraine in the south direct to the EU at an enormous cost.
Russia wants the EU to pay a large chunk of the cost of both the pipelines and this cynical ‘gas turn off stunt’ is the current pressure play in action to force the EU into seeing the sense of paying a large portion for both the unnecessary pipelines.
Lesson for the EU is to find another reliable supplier and bypass Russia NOT waste money on NORDSTREAM or SOUTHSTREAM gas pipelines which benefits only Russia. Use the money saved, to build pipelines bypassing Russia.
Ukraine returned the favour and hiked the TRANSIT cost of Russian gas going through the Ukrainian pipelines heading for Europe. Russia pays only $1.6/mcm/100 km for transit, or less than half the average European rate while Slovakia charges upwards of $4/Mcm/100 km for transit through its gas pipelines and only pays $270/mcm for its gas. Russia thus demands the European rate for its gas from Ukraine—while paying half the European rate for transit of its gas through Ukraine, and when it doesn’t get its way it cuts off supplies to Europe. Well, two can play at the hike game. Learning the lesson of Russia’s behaviour, the Ukraine has stockpiled 6 months of gas supply reserve for its own use in underground caverns.
Russia refuses to pay the increased TRANSIT cost and turned off gas using as a lame excuse the unverifiable accusation that the Ukraine was stealing Europe's Russian gas supplies through Ukraine—the Russian media is blasting the latter story throughout the world.
In reality, Russia is hoping to push the benefits of an under the Baltic NORDSTREAM gas pipeline bypassing Belarus in the north and then later a SOUTHSTREAM gas pipeline under the Back Sea bypassing the Ukraine in the south direct to the EU at an enormous cost.
Russia wants the EU to pay a large chunk of the cost of both the pipelines and this cynical ‘gas turn off stunt’ is the current pressure play in action to force the EU into seeing the sense of paying a large portion for both the unnecessary pipelines.
Lesson for the EU is to find another reliable supplier and bypass Russia NOT waste money on NORDSTREAM or SOUTHSTREAM gas pipelines which benefits only Russia. Use the money saved, to build pipelines bypassing Russia.
This was in 2005 and nothing has changed
