Putin Tells Merkel "Ukraine On The Verge Of A Civil War" As Germany Agrees To Re-Sell Russian Gas To Ukraine

Tyler Durden's picture


A day after Putin called Obama to warn him that only the US president can prevent bloodshed in Ukraine - something which Obama failed at based on this morning's reports out of east Ukraine - German Chancellor Angela Merkel had a follow up phone call with the Kremlin a few hours ago, in which Putin told her that "The sharp escalation of the conflict puts the country, in essence, on the verge of a civil war".

From Itar-Tass:

President Vladimir Putin has had a telephone conversation with Chancellor Angela Merkel of the Federal Republic of Germany and discussed with her the situation in Ukraine, the Kremlin press service reports.


Russia's Head of State pointed out , "The sharp escalation of the conflict puts the country, in essence, on the verge of a civil war".


The leaders of the two countries accentuated the importance of talks in a quadripartite format (Russia, the European Union, the United States, and Ukraine), planned for April 17. "Hope has been expressed that the sides at the meeting in Geneva will manage to convey a clear message contributing to directing the situation into a peaceful channel," a Kremlin press service official added.


The RF President also recalled the importance of stabilizing the economy of Ukraine and of ensuring deliveries and transit of Russian natural gas to Europe. This had been reiterated in his message, dated April 10, 2014, to the leaders of a number of European countries.


The telephone conversation was held on the initiative of the German side.

Considering the events from this morning which nearly resulted in the S&P plunging below 1800 only to be "redeemed" by the "bad news" that the Japanese economy is about to stumble yet again, leading algos to believe that more BOJ QE is imminent and sending the S&P surging by over 30 points in the span of a few hours, this is hardly surprising.

What is more surprising, is that as we reported earlier, the very same Germany, through its RWE AG utility, announced it would supply Ukraine with nat gas in 2014 since Gazprom is adamant on no longer providing the troubled country with the precious commodity in the absence of payment (which Ukraine can't afford). WSJ reports:

German utility RWE AG said it agreed to supply Ukraine with natural gas this year, as the troubled country seeks to reduce its reliance on gas imported from Russia.


RWE is the first European energy company to agree to supply gas to Ukraine since the political crisis there threatened the former Soviet republic's supplies from Russia. But the deal underscores the extent to which Europe, now scrambling to shore up Ukraine, also depends on Russian gas.

The paradox of course, is that Germany itself is reliant on Russian natgas exports for about a third of its needs, which means that the gas Germany "sells" to Ukraine will in fact originate in the Ukraine! "RWE declined to estimate how much of its gas deliveries to Ukraine's state-owned energy company Naftogaz will likely stem from Russia or to provide details to the agreement, such as volumes, price or the duration of the shipments."

What the deal would do, is to allow Ukraine to purchase nat gas at lower prices than the 81% price surge Gazprom is demanding from Ukraine in the Kremlin's implicit halt of gas supplies to the intransigent ex-USSR republic. As a result, the deal "could at least partially buffer Ukraine from price increases imposed by Russia's OAO Gazprom—which currently supplies the vast majority of the country's gas imports—and the state-owned energy giant's recent threats to turn off the spigot. RWE said it would begin the gas deliveries via Poland immediately, adding only that the gas would be supplied at European market prices, including delivery costs."

There are other complications:

It isn't clear how much gas the RWE deal will enable to flow to Ukraine. Under a 2012 deal between the German utility and Ukraine, the German company could ship up to 10 billion cubic meters of gas to Ukraine each year—the precise amount is agreed upon annually. However, RWE currently can't ship the maximum allowable amount because of capacity constraints, a company spokesman said. RWE shipped around one billion cubic meters of gas to Ukraine last year.


Ukraine consumed around 50 billion cubic meters of gas in 2013, of which 60% came from Russia, according to its government. and most of the rest was produced domestically. Gazprom earlier this month raised gas prices for Ukraine by 81%, saying that Naftogaz owed it around $2.2 billion. Officials in Moscow later warned there could be gas-supply disruptions if Ukraine's unpaid gas bills weren't resolved.


Some analysts caution that European countries won't be able to supply Ukraine with significant quantities of gas until pipelines that carry gas into the country are upgraded.


Central and Eastern Europe's gas-pipeline system was built to ship large quantities of Russian gas westward. After a price dispute in 2009 prompted Gazprom to temporarily halt gas supplies to Ukraine, the European Union looked into upgrading pipelines to allow for reverse flows of gas back into Ukraine. The EU currently receives around 30% of its annual gas demand from Russia, of which around a half is delivered via pipelines that run through Ukraine.


But reverse-flow capacity into Ukraine is still limited. In 2013, around 2 billion cubic meters of gas were shipped to Ukraine via Poland and Hungary, according to the European Commission.

Finally, even this attempt to keep Ukraine plugged in, is likely merely for optical purposes:

Jonathan Stern, senior research fellow at the Oxford Institute for Energy Studies, said Russian gas supplies to Ukraine would likely remain indispensable near-term.


"I expect that raising reverse-flow capacities to around 5 bcm this year should be possible, but that would still leave a large gap to meet all of Ukraine's gas needs," Mr. Stern said.

Of course Putin knows this. He also knows that all this deal really means is that instead of Ukraine paying Gazprom it will now be up to Germany to foot the bill for Ukraine token nat gas supply, which in the grand scheme of things, will hardly be sufficient to move the needle.

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Tue, 04/15/2014 - 19:40 | 4663321 Timmay
Timmay's picture

Somebody, quick, print some money.....

Tue, 04/15/2014 - 19:46 | 4663341 Mr Pink
Mr Pink's picture

Boston marathon finish line evactuated. Possible bomb. Story at 11

Tue, 04/15/2014 - 19:53 | 4663367 SmilinJoeFizzion
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Sounds like another whack job

Tue, 04/15/2014 - 20:16 | 4663467 Latina Lover
Latina Lover's picture

America is now trying to create a syria style civil war in  the Ukraine, to destablize Russia. It will fail since ukrainians will not die enmass for phony ideals. They've been there, and done that under the USSR.  Putin understands the CIA game plan and will give the Americans valuable lessons in tradecraft.

Tue, 04/15/2014 - 20:31 | 4663518 SoberOne
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Any Craft agents spotted? Where'd your backpack go, bro?

Tue, 04/15/2014 - 20:39 | 4663531 Latina Lover
Latina Lover's picture

Brennan, head of CIA,was in Kiev Sat. April 12th, 2014. If you think he is visiting Kiev only to troll for local boys, then there is nothing I can say that will persuade you.



Tue, 04/15/2014 - 20:48 | 4663559 macholatte
macholatte's picture


it will now be up to Germany to foot the bill for Ukraine token nat gas


history tells us that one way or another, sooner or later, the bill will be paid by the American sheeple.

Tue, 04/15/2014 - 20:59 | 4663579 666
666's picture

Why should Putin lose sleep about losing income by supplying gas to the Ukraine? All he has to do is turn the valve and send that gas to China and India.

Tue, 04/15/2014 - 21:19 | 4663644 markmotive
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Civil war around the corner.

Ex MI5 on how 'US miscalculated will of Ukrainian people'


Tue, 04/15/2014 - 23:07 | 4663922 Four chan
Four chan's picture

what if hitler had saggy tits?

Tue, 04/15/2014 - 23:55 | 4664026 StychoKiller
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The paradox of course, is that Germany itself is reliant on Russian natgas exports for about a third of its needs, which means that the gas Germany "sells" to Ukraine will in fact originate in the Ukraine!


Someone, get Milo Minderbinder to make a statement...:>D

Wed, 04/16/2014 - 04:17 | 4664266 Contingent Claim
Contingent Claim's picture


Wed, 04/16/2014 - 04:43 | 4664281 Gavrikon
Gavrikon's picture

American taxpayers, huh? 

Actually, somehow I think my gas bill here in Germany is going to go up even faster than we thought.

And our electric bills have ALREADY gone nuts because we are shutting down our nuclear power plants in favor of "renewable" energy.

Fuck, maybe moving here from BRA wasn't such a great fucking idea.

Tue, 04/15/2014 - 22:04 | 4663769 Jack Burton
Jack Burton's picture

"to troll for boys" Good one! But get it right, "to troll for under age boys".

Wed, 04/16/2014 - 03:55 | 4664246 silvermail
silvermail's picture

Ability to manipulate the political situation in Ukraine - is the ability to manipulate energy security of Europe. If successful, this project USA in Ukraine, Europe will be destroyed economically and disintegrate into many states. After that, the U.S. is organizing a war between European states. And thus, the agony of the U.S. dollar will be again extended.

U.S. actions in Ukraine - it is a U.S. plan to rescue the U.S. dollar the expense of Europe.

Wed, 04/16/2014 - 07:57 | 4664483 Ayr Rand
Ayr Rand's picture

Prime Minister Puta .... what a fantastic ambassador for stupidity and death. Puta, Puta, Puta, Puta, ...!

Incidentally, since apparently nobody has thought about this (IQs having suddenly lowered again)... if the $ goes down in value by 20%, the GDP of the US goes up by about the same amount. No, the real danger to the US is that the $ goes up. 

Wed, 04/16/2014 - 03:44 | 4664235 silvermail
silvermail's picture

"America is now trying to create a syria style civil war in  the Ukraine, to destablize Russia."

America is now trying to create a syria style civil war in  the Ukraine, to destabilize EUROPE.

In this case, the United States will be able to successfully remove Europe (as main rival USA) from all of the financial and currency markets.
This will create a flow of money out of the economy in Europe, to the U.S. economy. Economic strangulation of Europe - this is the main goal of the U.S. in the Ukraine.

Wed, 04/16/2014 - 06:37 | 4664351 old naughty
old naughty's picture

Let me get this straight, this is the "fxxk EU" plan all along...and Put-in is in on it?

Tue, 04/15/2014 - 20:09 | 4663433 McMolotov
McMolotov's picture

Heavens to Merkeltroyd! (trying to stay on topic)

Tue, 04/15/2014 - 20:20 | 4663486 jon dough
Tue, 04/15/2014 - 20:21 | 4663491 wee-weed up
wee-weed up's picture

Merkel: "Vlad, we want gas!"

Putin: "Pull my finger!"

Tue, 04/15/2014 - 20:24 | 4663499 Alpo for Granny
Alpo for Granny's picture

Glad you have been around again McMolotov.

That is all.

Tue, 04/15/2014 - 20:11 | 4663444 Deathrips
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No shit. Watch Syria, Nevada and Saudi.....too.

These fuckers are going hot!



Tue, 04/15/2014 - 20:23 | 4663495 Alpo for Granny
Alpo for Granny's picture

Quick..remove every Bostonian from their homes at gupoint. If they ask why, shoot them turrists in the face.


Tue, 04/15/2014 - 20:20 | 4663488 Alpo for Granny
Alpo for Granny's picture

Piece of shit war monger John Mccain on Faux news now beating the war drum. Comparisons of Putin to hitler, US will "go it alone", must support the oppositon at all costs,  etc etc.


Tue, 04/15/2014 - 20:36 | 4663527 wee-weed up
wee-weed up's picture

Ol' McCainiac needs to be put in a home somewhere where nurses can look after him...

Tue, 04/15/2014 - 21:47 | 4663731 americanspirit
americanspirit's picture

Wee-weed up - I think old Songbird John needs to be put under an interstate overpass where other old veterans can take care of him. Slowly and very painfully.

Tue, 04/15/2014 - 22:06 | 4663771 Jack Burton
Jack Burton's picture

McCain lost his mind in the Hanoi Hilton, many men better than me would. But that does not excuse his insane war mongering, nor his desire to have our children do his fighting. Fucker, what was he doing over Vietnam anyways? Was it his country? Did the people want him there? Who was he trying to kill and why?

Wed, 04/16/2014 - 04:44 | 4664282 Gavrikon
Gavrikon's picture

I think it's time we had us a lynchin.'

Tue, 04/15/2014 - 19:46 | 4663343 Aknownymouse
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Print more gas.

Tue, 04/15/2014 - 20:05 | 4663412 CrashisOptimistic
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"The paradox of course, is that Germany itself is reliant on Russian natgas exports for about a third of its needs, which means that the gas Germany "sells" to Ukraine will in fact originate in the Ukraine!"


Probable error here, Tyler.

German gas from Russia arrives via the Nord Stream pipeline.  That would be what is sent to Ukraine.  It doesn't pass thru Ukraine.  It's a separate pipeline, way up north.

Tue, 04/15/2014 - 20:45 | 4663550 Latina Lover
Latina Lover's picture

Personally, I don't think Gazprom cares if Germany imports gas and resells it to the Ukraine. This way, they are guaranteed to get paid.

Tue, 04/15/2014 - 22:09 | 4663781 Jack Burton
Jack Burton's picture

Indeed! It was Gazprom itself that suggested this solution to Europe. Putin forwarded a letter to that effect to all EU leaders several days ago. It seems in this case the EU got the message and took Vlad good advice. As today, Vlad suggested that only the USA could stop the unfolding civil war in Ukraine. But instead, the USA praised the military attacks as restraint! Also, the Ukrainian Rada passed a law during Euro Miadan riots that army and police are forbidden to use armed for on protestors. Funny, that!

Tue, 04/15/2014 - 22:27 | 4663346 Spumoni
Spumoni's picture

Ja, vee should make a litte money...vee don't vant Gazprom losing so much profit, nein! Zee bunds, zee bunds! Vee must haff our coupons, genau!


edit: Hey - no offense to anyone. Its just hard to resist when its Merkel, a German accent, and Rusky gas all in one story. I'm tellin' ya - this shit is rich. Grand larceny indeed!

Tue, 04/15/2014 - 19:48 | 4663352 Bill D. Cat
Bill D. Cat's picture

This reminds me of Jackass when one of the idiots is wearing an antique metal diving helmet with a hose attached . 

The gas only goes one way .

Tue, 04/15/2014 - 19:51 | 4663362 WMM II
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"Putin Tells Merkel "Ukraine On The Verge Of A Civil War" As Germany Agrees To Re-Sell Russian Gas To Ukraine"




yeah. just like 97+% of the crimean folks really voted for czar putintake.



Tue, 04/15/2014 - 20:06 | 4663425 CrashisOptimistic
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97% sounds right.  They were told, rightly, their pay would double or triple.  Russian pay rates are way above Ukraine's.



Tue, 04/15/2014 - 20:19 | 4663485 Deathrips
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I thought the dodo was extinct....well i guess MDB has been here too.



Tue, 04/15/2014 - 22:12 | 4663794 Jack Burton
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Pay tripled, pensions doubled. Russian passports for all. The state declared debt free with zero government debt per citizen. No IMF loans or EU austerity. Man, you would have to be a right stupid daft cunt to not vote to join Russia, especially when over 60% were Russians! But then, we expect the CNN crowd to come on ZH and spew the Washington line.

Tue, 04/15/2014 - 22:28 | 4663819 HardlyZero
HardlyZero's picture

Completely agree on the talk...even if it is half-truths it is better than the alternate.  Also if they develop Odessa and other seaside areas it could turn into Russia's only warm sunny beachside community (like South of France or California).

A Russia only Ukraine will eliminate middle-man and EU gets cheaper more reliable energy, assuming the Russians hold up their end.   Maybe it will work.

The right investment and thinking and 5 years of stability, keeping Ukraine tax-free zones, and it might turn the corner.  

It is hope and a prayer.

Hope something good comes out of all these problems and the weapons can be put away.

Tue, 04/15/2014 - 22:28 | 4663839 Spumoni
Spumoni's picture

They'll sell 10,000 square foot dachas to German Banksters. Everything'll be fine. 

Tue, 04/15/2014 - 23:23 | 4663968 Volkodav
Volkodav's picture

Odessa is not Crimea...

just a referendum away...

Tue, 04/15/2014 - 23:36 | 4663991 Real Estate Geek
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How the worm has turned.  Crimea may shape up as a West Berlin for the new millenium. 

Wed, 04/16/2014 - 06:29 | 4664343 eurogold
eurogold's picture

+1000 to Jack Burton !

Wed, 04/16/2014 - 13:24 | 4665406 WMM II
WMM II's picture

Jack Burton:

"The state declared debt free with zero government debt per citizen. No IMF loans or EU austerity."

but of course, the crimeans could have done that as an independent country. they didn't need putinczar for that.


"Man, you would have to be a right stupid daft cunt to not vote to join Russia, especially when over 60% were Russians!"

too bad an independant crimea, under neither putinzar nor ukraine was not on the ballot. but hey, who needs real choices when you've got the oligarchs.


as for '60% were Russians'... well, that buys into the putinczar-party line:

"speak russian you shall be russia's. its your only choice. and i've got the guns to prove it. don't speak russian? but you neighbors do? bad luck, you're russia's too."

perfect rationalization for russian expansion. much akin to the domino theory of old for the u.s. of a.


"But then, we expect the CNN crowd to come on ZH and spew the Washington line."

jack, you don't recognize me?




Wed, 04/16/2014 - 10:51 | 4665025 WMM II
WMM II's picture

crash: "97% sounds right.  They were told, rightly, their pay would double or triple."


and that there were weapons of mass destruction in iraq.


"russian pay rates are way above ukraine's"

so, wages in crimea, when ruled as a part of ukraine by that guy who fled for his life to russia, were being held artificially low? to the tune of double or triple?

magic wand does putintake have? unionization? surplus funds from the bank of putintakin-oligarch?


just like those 90+% landslide victories of the ol' south america - africa, the people 'voted' the next generation of dictators into power, the 97% is soooo unbelievable that the only reasonable conclusion is that the number is utter and complete nonsense.

but of course, with that clear of a mandate, only a fool would not let in the international monitors to validate the overwhelming support of the people and silence those, like me, who said bullsh*t to that election.



p.s. just for fun, check back in a year or so and see if that 'double or triple pay' comes to fruition.

i will.





Tue, 04/15/2014 - 20:19 | 4663481 Mine Is Bigger
Mine Is Bigger's picture

The 90+% figure is among the Crimean people WHO VOTED, not among the region's population.  I don't blame you, since all news reports I saw and read cast it as "an impossibly high proportion of the population voted for secession" as if to suggest the results were manipulated.

Tue, 04/15/2014 - 20:42 | 4663540 Latina Lover
Latina Lover's picture

You are right of course.  The Crimeans would rather have gas prices double, pensions cut by 50%,  wages not paid, currency controls and ultra high inflation than leave the Ukraine, run by a coup government. Sarc off/

Wed, 04/16/2014 - 12:08 | 4665378 WMM II
WMM II's picture

too bad the crimeans weren't given the choice to be free of both the putinczar and the corruption rampant under the russian fella who fled back home after he was tossed out for being, well, let's call it czar-like. but hey, who needs real choices when there's an 'election'.


as to the economic choices you laid out for the folks in the crimean, putinczar has shown the talent to fix the russian economy, so he ought to be able fix the crimean one.




Tue, 04/15/2014 - 20:57 | 4663558 socalbeach
socalbeach's picture

There was an 84% turnout, and 97% of those wanted to re-join Russia.  However, for WMM II to calculate the total % of registered voters that wanted to become part of Russia requires advanced math: multiplication.

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