Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on April 13, 2014
Risk of “gas war” grows as Ukraine halts payments to Russia
* Crisis mounts after Russia’s seizure of Crimea region
* Kiev to stop paying for gas pending new supply deal
* Ukraine says Russian gas price hike unacceptable
* Armed men seize police station in eastern Ukraine
* Billionaire energy mogul scoffs at Western sanctions
By Pavel Polityuk and Conor Humphries
KIEV, April 12 (Reuters) – Ukraine said on Saturday it was suspending payments to Russia for deliveries of gas, ratcheting up the tension in a standoff that has the potential to leave European Union states cut off from the Russian gas supplies on which they depend.
In eastern Ukraine, where groups of pro-Russian activists have been emboldened by the Kremlin’s annexation of the Crimean Peninsula, a band of armed men in mismatched camouflage outfits seized a police station in the town of Slaviansk.
Russia and Ukraine have been locked in confrontation since protests in Kiev forced the Moscow-backed president from office, and the Kremlin sent troops into Crimea. Now, the gas dispute threatens to spread the impact across Europe.
A large proportion of the natural gas which EU states buy from Russia is pumped via Ukrainian territory, so if Russia makes good on a threat to cut off Ukraine for non-payment of its bills, customers further west will have supplies disrupted.
Andriy Kobolev, chief executive of Ukraine’s state-run energy company Naftogaz, said the increased price Russia was demanding for its gas was unjustified and unacceptable.
“Accordingly, we have suspended payments for the period of the price negotiations,” Kobolev was quoted as saying in an interview with Ukraine’s Zerkalo Nedely newspaper.
In fact, Ukraine has de facto stopped payments already because it failed to make an instalment of over $500 million due earlier this month to Russian state gas giant Gazprom.
But the decision to formally suspend payments shows there is no sign of a compromise with Moscow, and may push the two sides closer to a repeat of past “gas wars”, when Ukraine’s gas was cut off, with a knock-on effect on supplies to EU states.
Kiev and Brussels have been scrambling to blunt the impact of any decision by Moscow to cut off gas to Ukraine.
In particular, they are working out ways to keep supplies flowing to EU states, and for those countries to then pump the gas to Ukraine by reversing the flow in their pipelines.
Moscow says it does not want to turn off Ukraine’s gas if it can be avoided, and that it will honour all commitments to supply its EU customers. Gazprom could not immediately be reached for comment on Saturday.
ARMED MEN
The dispute over Ukraine, precipitated by the overthrow of Ukrainian president Viktor Yanukovich after he rejected closer ties to the EU, has brought Russia’s relations with the West to their most fraught state since the end of the Cold War in 1991.
In Slaviansk, masked men armed with pistols and rifles stood guard near the police station as hundreds of locals gathered around, some building barricades with car tyres, according to a Reuters photographer on the scene.
They were wearing orange and black ribbons, a symbol of the Soviet victory in World War II that has been adopted by pro-Russian separatists in Ukraine.
Slaviansk is in the Donetsk region about 150 km (90 miles) from the Russia-Ukraine border. Pro-Russian groups have also occupied public buildings in the cities of Donetsk and Luhansk, and are demanding autonomy from Kiev.
Officials in Kiev’s Western-leaning interim government say Russian forces may be preparing to cross the frontier into Ukraine on the pretext of protecting the pro-Russian activists from persecution, though Moscow denies this.
Ukrainian Interior Minister Arsen Avakov said police would deal very firmly with the group in Slaviansk. “There is a difference between protesters and terrorists,” he wrote on his Facebook page.
Earlier on Saturday in the nearby city of Donetsk, a group of young people armed with wooden bats briefly took over a floor of the general prosecutor’s office. They later left after talks, Donetsk police said in a statement.
Ukrainian Foreign Minister Andrii Deshchytsia said Kiev was ready to listen to the demands of protesters in eastern Ukraine, but if negotiations fail, the police were ready to act.
“We do consider that these actions are inspired and prepared in Russia and encouraged by some of the Russia agents in Ukraine,” he told BBC radio.
SCOFFING AT SANCTIONS
The EU and the United States imposed sanctions on Russian officials and leading business figures in response to Moscow’s annexation of Crimea, which is home to Russia’s Black Sea fleet and was part of Russia until 1954.
Moscow has so far scoffed at the Western measures and warned that, in the long run, the EU and Washington will come off worse by losing out on trade with Russia.
Gennady Timchenko, a billionaire oil and gas trader who is on the U.S. list of people subject to asset freezes and visa bans, joined the chorus of Russian defiance.
“The fact that I was included in the list was a little surprising maybe, but it was quite an honour for me,” he said in an interview with the state-run Rossiya television station to be broadcast later on Saturday.
He said growing volumes of Russian natural gas would be sold to Asia, as part of a strategy of turning away from a Europe which the Kremlin considers unfriendly.
“It seems to me they (the Europeans) just don’t understand. The politicians are behaving … in a very short-sighted way.”
9 Comments on "Risk of “gas war” grows as Ukraine halts payments to Russia"
rockman on Sun, 13th Apr 2014 3:06 am
“In particular, they are working out ways to keep supplies flowing to EU states, and for those countries to then pump the gas to Ukraine by reversing the flow in their pipelines.” It isn’t clear to me how this solves the NG price problem for the Ukraine. All fine and dandy to reverse pipelines from the EU to deliver NG to the Ukraine. But what is the Ukraine going to pay for it? If the EU buys it from Russia they are going to pay the market rate. So is the Ukraine going to pay what an EU country pays Russia for that NG or is that country going to sell it at a loss?
Russia hasn’t said they won’t sell NG to the Ukraine… they will but without the discount the Ukraine has been receiving. And if Russia doesn’t sell NG to the Ukraine that doesn’t mean the EU countries can’t buy it and pay the Ukraine a transit fee. And if the Ukraine won’t transport the NG to the EU I suppose the US will accuse them of using energy as a weapon just as it has accused Russia of doing.
Makati1 on Sun, 13th Apr 2014 3:34 am
“Crisis mounts after Russia’s seizure of Crimea region”
First: Russia did NOT seize the Crimea. It’s people voted almost unanimously to leave and join Russia. The Russian Troops in the Crimea we legal under previous agreement with the Ukraine government.
Second: The ‘government’ in Kiev is illegal and a puppet of the West. It is fast-tracking shackles to the West and IMF that will not be good for Ukrainians.
Third: The West is losing as more than 15% of Europe’s NG comes thru the Ukraine. If they (Ukraine) stop paying, Russia cuts of the NG to them and then they in turn will shut off all NG to Europe. Then it will be the West’s mess to clean up as Europe flounders and Russia says they sent the NG as contracted.
I see the Ukraine breaking in two and the West going to Europe as another beggar country, and the East going to Russia, either by vote or by war. If war, the US and the EU will be out of the frying pan and into the fire. Going to be an interesting year!
Arthur on Sun, 13th Apr 2014 8:05 am
http://mobile.reuters.com/article/idUSBREA3A0PO20140411?irpc=932
Europe is going to help the Ukraine paying it’s gas bill as it absolutely cannot afford losing supplies.
Actually I like this development, as it pushes the urgency of the energy problems to the forefront, forcing the Europeans to become even more serious about energy than they already are, while there is still fossil fuel to build a new infrastructure.
Meanwhile pictures from the eastern Ukraine are worrisome and it looks as if Russian citizens are preparing for a split. This is a real horror scenario, because there is no clear frontier. Prepare for the next Yugoslavia and Syria and hundreds of thousands of people on the move. And if very similar people like Russians and Ukrainians go at each others throat, you can bet your last dollar what is going to happen in western Europe and north America once the financial system crashes. Ethnic cleansing as the new normal.
Davy, Hermann, MO on Sun, 13th Apr 2014 12:23 pm
MAK, you needs some meds because you are way too excited about the death of your hated West. Chill man it is not that bad. Life will be OK.
Art, Agreed, it will be a messy affair. It should be seen as a mutual self-interest of US, Russia, and Europe that Ukraine will be a TBTF country that will spread a very dangerous contagion to the world economic system. Russia will be the worst affected with the challenge of supporting a large amount of people in the state of a nonfunctioning economy. They are gaining people and territory but I feel it will be an expense they can little afford considering the size of their economy (smallish) and other obligations. Europe is much better prepared to handle the western section with money but not logistics. It will be a complicated affair with the vast amount of space and all the different countries. I imagine the worst will be in the east with a rump Ukraine government remaining in the west but broke. The US should realize the vulnerabilities of the economic system from a crisis of this magnitude. The markets are already shaky. Yet, the idiotic USPTB probably think this is worth the risk to destabilize the Russian economy and borders. This is a very bad omen if this is the case of the USPTB.
Makati1 on Sun, 13th Apr 2014 2:47 pm
Davy, you need to take are real look at the world today. I’m not over reacting. I’m just telling it from my perspective outside the Empire’s curtain. I
‘m not worried about life being ‘ok’. At my age it isn’t important if it is ok or not, It is what it is. I live for today. I have enjoyed about 25,500 ‘todays’. Everyone is a plus. I have raised a family and seen my kids independent and self sustaining.
I can afford to look at the world with open eyes. Nothing frightens me. Nor does death. It is liberating when you owe no one and death is not to be feared. You can enjoy each day and not worry about tomorrow. If I die, I will never know it. I have no fear of some mythical hell nor of a life after. I am alive for the first time on my life. If you are jealous, too bad.
Kenz300 on Sun, 13th Apr 2014 3:13 pm
One more reason to transition to alternative energy sources…………
Wind and solar can be produced locally…………
No too many wars will be fought over wind and solar…
Davey on Sun, 13th Apr 2014 3:28 pm
MAK, if that is the case and you are in a state of nirvana why make such a big deal about your evil America? Why show so much dissoence? Chill and be happy friend
bobinget on Sun, 13th Apr 2014 4:54 pm
First of all, pipeline reversal takes years, at least in North America.
Looks like US NG exporters will get their wish sooner then later: In a Louisiana swamp several miles upriver from the Gulf of Mexico, about 3,000 construction workers are building a massive industrial facility to liquefy natural gas, preparing for a new era when the U.S. will begin exporting energy around the globe.
The $12 billion project is one of the largest single industrial investments in the nation, part of a massive transformation of the energy sector …….. Snip
nemteck on Sun, 13th Apr 2014 6:28 pm
“…. keep supplies flowing to EU states, and for those countries to then pump the gas to Ukraine by reversing the flow in their pipelines.”
A can believe it. The stupid EU politicians will subsidize the gas for the Ukraine, a failed state that is unable to pay back. The EU seems to like this sort of deals and it falls well into the scheme laid out for Greece, Spain, Portugal, Cyprus, etc.