Posted on 12/14/2005 11:37:27 AM PST by jb6
MOSCOW (AP) -- A fight over gas prices between Russia and Ukraine turned ugly Wednesday, as Russia's natural gas monopoly said it would sharply increase prices for Ukraine in 2006, accusing Kiev of dragging its feet during negotiations. ADVERTISEMENT
Gazprom's latest comments highlight a deepening chill in the neighbors' relations that set in with the election last year of Ukrainian President Viktor Yushchenko. He has pledged to bring his nation of 47 million closer toward Europe and away from Moscow's influence.
"The talks with Ukraine have dragged on for more than nine months and, regrettably, no progress has been reached," Gazprom's deputy board chairman Alexander Medvedev said in televised remarks.
Medvedev said that Gazprom now planned to charge Ukraine a European price of US$220-$230 (euro185-euro193) per 1,000 cubic meters, taking into account a Ukrainian transit fee. Kiev had been paying US$50 (euro42), and had balked at Gazprom's proposal to triple that price.
"Ukraine has wasted time in these talks, and now there can be no talk of US$160," Medvedev said. "The market situation has changed, and it's continuing to change."
Under the new scheme, Ukraine would be charged a floating price for gas based on market prices for a basket of oil products, he said.
Yushchenko suggested Wednesday that the negotiations were being used as a form of political pressure, and said he was confident a compromise would be reached.
The state-controlled Gazprom is also renegotiating export contracts with other former Soviet states, including Georgia, Moldova and the Baltic countries -- all of which have sought to move out of Moscow's orbit and forge closer ties with the West.
While analysts see the move to market prices as making overall financial sense, they emphasize that the dispute is minor compared to other tasks facing Gazprom, including tackling the problem of its loss-making but politically sensitive domestic sales.
"When it comes down to it, it is a net positive," said Roland Nash, head of research at the Renaissance Capital investment bank. "But there are so many more important things."
"It is more than just coincidence that Ukraine moves to a pro-Western government and Gazprom moves to a European pricing system for its exports to Ukraine," Nash said.
Russian officials insisted that the changes marked a financially justified break with Russia's Soviet past.
"The time when we built relations by quasi-subsidizing neighboring economies is gradually passing," Russian Finance Minister Alexei Kudrin was quoted as saying by the RIA Novosti news agency. "We must think about our own interests."
Medvedev suggested caustically that, since the EU gave Yushchenko's government a vote of confidence by granting it market economy status in November, Ukraine should be happy to accept the new, European-style pricing arrangement.
The dispute has also worried the European Union since Gazprom supplies about half of the EU's gas and 80 percent of Gazprom's European exports pass through Ukraine. Yushchenko has said supplies to Europe would not be affected.
Gazprom warned Tuesday that it could stop supplying gas to Ukraine if no agreement was reached by the end of the year, with gas intended only for Europe passing through the pipeline.
Ukrainian officials say Gazprom is pushing Ukraine to enter into a consortium that would give the Russian company a management stake in Ukraine's existing pipelines. Russia has a similar arrangement with Belarus, which has not seen its gas prices revisited.
"In my opinion, this can't be discussed," Andriy Lopushanskiy, deputy head of Ukraine's state-controlled gas company, Naftogaz, was quoted as saying by Ukraine's Unian news agency.
He called Gazprom's new price proposal "not competitive, and for Ukraine, this is unacceptable."
Ukraine uses almost 80 billion cubic meters of gas annually, receiving 25 billion cubic meters from Russia, and 36 billion cubic meters from Turkmenistan, pumped via Russia. Ukraine itself produces some 18 billion cubic meters.
The France-sized nation is heavily dependent on gas, which serves as the primary source of heating in apartments and homes. As well, the chemical and metal sectors are giant consumers of energy and considered very inefficient, consuming about two-and-a-half times as much energy as Poland for every dollar's worth of industrial production.
But they are also major contributors to the national gross national product, and price increases will eat away their profits.
"Gazprom and energy in general have always had an economic and political role," Nash said. "The political role is the projection of Russian influence abroad and Ukraine has often been a target of this influence."
So now they got smacked back, prices will be about 95% of market value.
Another bunch of leftists and socialists ruining their economy, evidence of which can be found throughout the Socialist States of Europe which with all its industry and greater population base can't keep up with the US in its wet, socialist, bureaucratic dreams.
ping
Despite you did not send me "ping" I wont give you link http://www.apn.ru/?chapter_name=advert&data_id=788&do=view_single
where you can get a good article Part 4 (if you can read in Russian language, you can find and read Part 3,2,1,etc.
what the hell does "Yuschenko is a socialist" line, repeated ad nauseum, have to do with this blatant Russian example of robbery? (Yeah, ok- socialist policies caused prices on Russian gas to rise.) A real reason for this? Russia is a big sour puss seeking revenge for last year's elections.
Ukrainian article - http://www.pravda.com.ua/news/2005/12/15/36676.htm .
(Translation of author's point- Russia rising price to $260 is a desperate act- she knows that with such a drastic price hike she could lose Ukraine forever. And Russia is desperate enough to go with that. It's another Stalingrad- either win in parliamentary elections in 2006 or lose Ukraine.)
Welcome to reality, the market price is $255, Europe's discount is a price of $230. Ukraine was paying $50, or less then 20% of the market price and often reselling at the market price, that's thuggery or rather theft. Even at $160, that's less then 60% of the market price, so your hero threatened to just steal from the pipe what he wanted. Fine, now the back stroke on this tennis match is $230 or Europe's rate (still cheaper then what we here in the US pay). Actually, if you blow it and don't buy, maybe it'll come here to the US. I hope it does. My bill has gone up 45% this year alone and is projected to go up another 30-40% just this winter. Your loss our gain.
Reality is, there would be mass demonstration in the streets and Yushchenko's party would loose totally at the elections. It's still cold in March, everyone will have a fresh memory.
Reality was that Russia for years gave gas practicaly for nothing to Ukraine as political act, now if Ukraine wants to break away from Russia influence and go to EU, Ukraine should pay market price.
Sval proverb:
"You cant have both, co*ck up the ass and soul in Heaven".
No difference then when we give flat out cash to nations, like Israel and Egypt and expect them to behave and vote a certain way, that's what foreign aid is for. We have money to give, the Russians have gas. It's when we give people like the PLO cash that I just don't understand why.
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