Ukraine Calls Russia’s Bluff, Slashes Nat Gas Imports By 80%

Ukraine Calls Russia’s Bluff, Slashes Nat Gas Imports By 80% (ZeroHedge, Feb 25, 2014):

Twice in recent years, Russia has suspended gas supplies, or notably raised prices, as the somewhat well-known “trump card” of Russia’s oil and gas supply to Ukraine (and Europe for that matter) remains Putin’s easiest option for clenching his iron-first against the divided nation. Following a pre-emptive move in November by Ukraine to diversify its energy supply,  Russia had reduced the price of gas for the highly indebted Ukraine in December (to entice Ukraine under Russia’s wing); but, after recent events, Dmitry Medvedev signaled on Monday that the price could be raised again. However, today we find that Ukraine’s state oil and gas company, Naftogaz, has slashed gas imports from Russia’s Gazprom by  stunning 80% in February as Ukraine tries to show Russia it can’t be pushed around… of course, with limited (and more expensive) alternative supplies, we fear this could well shoot them in the foot.

This action is similar to that taken in November (before the EU accession discussion)…

Russia and Ukraine waged two gas wars over prices in the winters of 2006 and 2009 (which lasted 3 weeks) over a claim Ukraine was late in paying.

Ukrainian Prime Minister Mykola Azarov said that if Gazprom refuses to revise its contract, Ukraine would stop importing gas from Russia. In a step away from energy dependence on Russia, last week Ukraine signed a $10 billion shale gas deal with Chevron.

Ukraine is speeding up its effort to diversify its supply, and has looked at different exporters, fracking, new offshore projects in the Black Sea, as well as new LNG terminals and pipelines to diversify supply. Ukraine imports more than half of its gas from Russia, but under Viktor Yanukovich’s leadership, has intentionally scaled down Gazprom imports 40 percent over ‘unfair prices’.

And now today,

Ukraine’s state oil and gas company, Naftogaz, has slashed gas imports from Russia’s Gazprom to 28 million cubic meters per day as of February 24 from 147 million, two Russian industry sources told Reuters on Tuesday.

They said Naftogaz had gradually reduced its imports from 147 million cubic meters as of February 1, but did not offer a reason for the cuts.

Prime Minister Dmitry Medvedev hinted on Monday that gas prices, reduced as part of a Russian bailout in December, may revert to higher levels.

Ukraine consumes about 55 billion cubic meters of gas each year, and more than half is imported from Russia. Gazprom exported 161.5 billion cubic meters of gas to Europe last year.

A Gazprom official declined to comment on Naftogaz import volumes but said Russian gas transit to Europe was unaffected.

So simply put, they want to show Russia they can’t be pushed around… the trouble is, of course, that with alternative supply routes in short-supply (and only more expensive alternatives available)…

A map of Russian gas supplies to Europe via Ukraine

…they may well be shooting themselves in the foot. That and the whole being out of money thing too won’t help.  Finally, as everyone knows by now, Russia does have the “trump card” no matter how hard to get the Ukraine plays:

1 thought on “Ukraine Calls Russia’s Bluff, Slashes Nat Gas Imports By 80%”

  1. They can make all kinds of noise, but Putin wants the Ukraine. What Putin wants, he gets. Of all the world leaders, he is the one true chess player.
    If the Ukraine leadership is doing more expensive deals with Chevron while their currency is collapsing……they soon won’t be able to pay their bills. At that point, Putin will make them an offer they can’t refuse.
    Putin is utterly ruthless and also brilliant. Every move he makes is just leading to another move on the chessboard. The beauty of chess is that it shows the power of foresight, and planning ahead. Every move is made with next moves already in mind. It is hard to explain, but it gives one a concept of winning a step at a time. Foresight is essential…..and Putin has it.
    There are people in the Ukraine who want “independence” without a clue of what that means. If one looks at Russian history, it is the gloomiest, saddest and most brutal story in known history. People are used to suffering, and even if they hate Putin, they will accept him to keep their heating oil and food supplies. It is difficult for a western mind to conceive how dreadful the history of Russia (including the Ukraine) has always been.
    During the revolution of 1917, Lenin passed a law allowing soldiers to elect their officers. He was hailed as a great man of the people….as soon as he got into power, he abolished that law. Soldiers cannot elect their officers, popularity isn’t key to winning battles, thinking is the key.
    Divide and conquer, that is the motto of the US, and it has kept its own people in self inflicted chains. They foolishly buy into the republican vs democrat game which doesn’t exist the moment the cameras are shut off. Keeping Americans divided and fighting with each other keeps them off the backs of the corrupt leaders and their dreadful laws. They have used this policy all over the middle east, but Putin isn’t going to let them do it to Russia.
    Reunite and conquer is what he is selling his people……and it is working. He has re-instated Stalin as “Uncle Joe”, his pictures are on busses and billboards around the capital. The people protested at first, he took them down for a while, but they are back now, and nobody says a word.
    This is a chess player. The west is so short sighted, they don’t realize what danger he can bring to them all. The west, the home of the Great Enlightenment, the Great Experiment of people running their own nations… has failed miserably. As one who once embraced the concepts of the 18th century Enlightenment, I am sad to say what is happening today illustrates why much of western history was made up by individuals who were leaders, not by group thinking.


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