Who’s to blame for European gas cuts?

8th January 2009, Comments 0 comments

Engaging independent experts to read the gas gauge may be a way to put an end to Russia and Ukraine’s finger-pointing game.

MOSCOW – With Russia and Ukraine each pinning the blame for the cut in gas supplies to Europe on the other, a pivotal question is where does the truth lie between these two gigantic states.

The fact that almost a dozen European states were without Russian gas transiting across Ukraine due to the Moscow-Kiev dispute is not in doubt. But there is little clarity about how this came about.

Analysts say it is technically possible to ascertain with a reasonably high degree of precision exactly who did what with the gas, and when.

This however would require independent experts to read gauges measuring volumes of gas shipped into Ukraine from Russia and later pumped out of Ukraine to Europe, as well as third-party study of gas transit agreements.


- Russia cut off all supplies for Ukraine's domestic market on New Year's Day, blaming Kiev's negotiating team for failing to agree higher gas prices in new contract for 2009 and not paying off their debts.

Negotiating with Ukraine is "like having a talk with people from the planet Mars", said Gazprom's deputy chief executive Alexander Medvedev.

- Russian energy giant Gazprom had insisted it would observe all obligations to European customers but then accused Ukraine of effectively stealing millions of cubic metres of gas per day intended for European clients.

"Since the start of the year Ukraine has stolen 86 million cubic metres of gas from Gazprom," the company alleged in a statement on Wednesday.

- With gas supplies to Europe drying up, Gazprom then accused Ukraine of overnight on Wednesday shutting off the last of four pipelines - it charged Kiev had shut the first three the previous day -- carrying Russian gas across its territory to Europe.

- Gazprom has now formally stopped pumping transit gas to Europe but, it says, only because Ukraine shut off the all the pipelines first.


- In 2008, Ukraine paid 179 dollars per 1,000 cubic metres of Russian gas, far lower than the price paid by Gazprom's European customers.

But Kiev says Russia's proposed price rises were excessive given the global fall in energy prices, and blames the failure for the collapse of the negotiations on Russia.

- Ukraine has rejected the Russian accusations that it has been stealing gas and in turn alleged that Gazprom had substantially reduced the amount of gas it was sending to Europe.

However its state gas firm Naftogaz has acknowledged it has been removing so-called "technical gas" from the system to maintain pipeline pressure.

It says that Russia did not provide the usual 21 million cubic metres of this technical gas along with its deliveries for clients, giving Kiev a right to take this gas away.

- On Wednesday, Naftogaz said that Russia had stopped the transit of gas across Ukraine to European clients from its side.

"Russia has left Europe without gas," a spokesman for Ukraine's state gas company Naftogaz, Valentin Zemlyansky said.




For the moment, it appears the streams of accusations from both sides are set to continue flowing even as the gas dries up. The conflict has become highly mediatised, with Gazprom's Medvedev on a tour of Europe to ram home Moscow's position.

However it remains impossible to say who turned off the supplies in a move that has already left thousands of people in eastern Europe without gas amid a bitter cold snap.

"With no independent monitoring of gas metering stations on the frontiers ... the argument mainly boils down to Naftogaz's word against Gazprom's, with very little clarity," said analysts at Global Insight.

"Both sides continue to lob accusations, each seeking to blame the other for the current crisis."

In a sign such monitoring expertise may be at hand, Ukrainian Prime Minister Yulia Tymoshenko on Wednesday agreed to "immediately" allow European Union technical observers into Ukraine to monitor gas supplies.

"It's measurable. You can prove it by looking at the meters. But at this point the whole level of trust has broken down on both sides," said Chris Weafer, chief strategist at Moscow investment bank UralSib.

"What it would require essentially is a bunch of independent energy engineers coming into Ukraine and examining the pipelines, examining the meters."

[AFP / Expatica]

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