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Russia Halts Gas Supplies To Ukraine
After weeks of worthless foreplay whose outcome was known from the beginning despite just as worthless EU middleman Oettinger assuring everyone a deal was imminent any second now, overnight we got the long-anticipated mutual defection outcome and - as we warned - negotiations between Gazprom and Ukraine/EU fell apart with the Russian energy giant halting supplies to Ukraine unless Kiev prepays any and all gas deliveries from now on. Gazprom said it hadn't received payment for a debt it put at $4.458 billion by the Monday deadline it had set. "Ukraine will receive gas only in the amounts it has paid for," Gazprom said.
The reason for the collapse in talks: Kiev wants to pay $268.5 per 1,000 cubic meters of gas - the price it had been offered when Yanukovich was in power - but, in a compromise last week, said it would agree to pay $326 for an interim period until a lasting deal was reached. Moscow had sought to keep the price at the 2009 contract level of $485 per 1,000 cubic meters, but had offered to waive an export duty, bringing down prices by about one-fifth to $385, which brings it broadly into line with what Russia charges other European countries.
In other words, the delta was less than $60, and certainly a "fair" offer to Ukraine considering it is what Europe pays. However, it wasn't low enough for Kiev, which certainly is out of money once again having to spend the bulk of its IMF/EU aid to keep its military armed, and the only logical outcome - one in which the country would no longer receive something for nothing - transpired.
This hardly will be surprising to anyone: moments ago Gazprom CEO Miller added that Ukraine is unable to pay for its gas obligations in arrears, something the Ukraine side had confirmed previously when Miller added Kiev had been pumping Russian gas in its underground storage facilities at a blistering pace preparing for just this eventuality.
End result, a few hours ago, Gazprom made the following announcement: "Today, from 10:00 a.m. Moscow time, Gazprom, according to the existing contract, moved Naftogaz to prepayment for gas supplies ... Starting today, the Ukrainian company will only get the Russian gas it has paid for."
Gazprom also warned EU on "possible gas transit risks", meaning since all the gas sent to Europe transits Ukraine, it was quite possible Kiev would simply continue to siphon off Russian gas without paying for it. The problem there, however, is that the parties impacted would be Ukraine's BFFs: Germany, central Europe, and, of course, the UK. And what better way to sow discord among otherwise bosom friends than have them start fighting for Russia's energy scraps...
And now the question: how long before Ukraine's alleged 14 BCM in gas held in storage runs out and Kremlin once again has all the leverage. According to simple estimates, a few months at most, and certainly just in time for Ukraine's winter.
Gazprom said on Monday it had filed a lawsuit at the Stockholm arbitration court to try to recover the debt, while Ukraine's Naftogaz said it was filing a suit at the same court to recover $6 billion in what it said were overpayments.
A source at Gazprom said supplies to Ukraine had been reduced as soon as the deadline passed. EU data suggested that volumes were broadly stable as of 0630 GMT (7.30 a.m. BST), but it could take hours for data on Russian gas flows via Ukraine to reflect any reduction in supply in Slovakia or elsewhere.
Any reduction of supply could hit EU consumers, which get about a third of their gas needs from Russia, around half of it through pipelines that cross Ukraine. Earlier price disputes led to the 'gas wars' in 2006 and 2009 and Russian accusations that Ukraine stole gas destined for the rest of Europe.
"The gas for European consumers is being delivered at full volume and Naftogaz Ukraine is required to transit it," Gazprom spokesman Sergei Kupriyanov told reporters.
Ukraine's Naftogaz declined to comment, saying it would issue a statement later in the day, but its pipeline operator Ukrtransgaz said it was operating normally.
The "market" was quick to react and "punish" Gazprom:
Russian shares fell on the talks' collapse, which will increase tensions between Moscow and the West and could make it harder to arrange a truce in east Ukraine, where Ukrainian troops are fighting rebels who want the region to be absorbed by Russia.
At 0740 GMT, the dollar-denominated RTS index was down 2.2 percent at 1344 points, while the rouble-based MICEX slid 1.7 percent to 1,476 points, with investors fearful of growing tensions after the failure of talks.
Western countries see the talks as a gauge of Putin's willingness to compromise and had been looking for signs that he was trying to avert the threat of more Western sanctions.
Tensions were already high following Russia's annexation of Crimea after Moscow-leaning president Viktor Yanukovich was ousted and pro-Western leaders took over power in Kiev.
And now that Russia has not only cut off Ukraine but is allegedly once again piling up troops at the border following this weekend's bloodiest escalation yet, it is surely time to BTFD and BTFATH at the same time, because very soon it will surely be time for "Mr Chairman/woman to get to work" and inject gobs more liquidity to give the impression that all is still well.
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All those tanks might be the bailif
See what happens when you go to a gas station and say: "Fill 'er up, high test. Bill it to the EU."
Go long camping gas bottles.
Line up quick, my European friends.
This is a game of chicken between the EU and Russia.
The EU is betting that cutting off Ukraine ( and thus Europe, which comprizes about 30% of Russia's income) will hurt Russia before it hurts Europe.
Russia is betting that with all the Euroskeptics Europe will blink first. Russia's position would be stronger in winter, and will grow stronger over time.
And Obama is frantically looking for some foreign royalty to bow to.
It is not even summer time...
Putin only acts to appear staying on character.
That is theater.
The more Putin acts, the more he exposes how much he would have liked to be an 'american'.
How much of Europes Gas arrives via Ukraine?
I beleive their are other pathways to Europe, no?
The US/UK/EU backed fascist government in Kiev can't have it all ways.
They're slaughtering pro-Russian separatists in East & South Ukraine thereby denying them self-determination, they have a USD4.5 billion unpaid debt owed to Russia for gas previously supplied and now they threaten to steal gas en route to Europe if Russia doesn't continue supplying them with gas at a heavy discount compared to other European customers.
This stand-off will continue until late summer when the EU and IMF will panic and solve the problem with more taxpayers' money. Perhaps the IMF will fund further loans to Ukraine by taxing Christine Lagarde's salary...
The US/UK/EU backed fascist government in Kiev is not driven by logic, but by blind hatred of Russia, monstrous egotism, and Nuland USSA state department.
Europe's problem now.
And Wall Street goes up.........?
The problem there, however, is that the parties impacted would be Ukraine's BFFs: Germany, central Europe, and, of course, the UK
No they don't Germany has the Nord Stream and UK delivery is primarily LNG which Qatar is the #1 supplier of in the UK. Central Europe takes a hit albiet a lesser hit since plenty of gas flows in from North Africa through Libya/Italy (Kaddafi, Berlusconi hmmm....). Eastern Europe takes the hit primarily Poland/Slovokia/Hungary/Moldova taking the biggest hits.
Shuting off the gas is all about Moldova.
http://europa.eu/rapid/press-release_MEMO-14-355_en.htm
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The EU and the Republic of Moldova will sign on 27 June 2014 an Association Agreement including a Deep and Comprehensive Free Trade Area. This will open a new chapter in EU-Moldovan relations.
...
By doing this Moldova is no longer considered a neutral state just Ukraine was considered a neutral state until they signed an association agreement with the EU then pulled out and all of a sudden Euromaidan happened and NATO assets started moltov cocktailing the place.
And more importantly
...
ENERGY: UNGHENI-IASI GAS INTERCONNECTOR
With Moldova's high dependency on the energy imports and specifically 100% gas imports reliance on one single supplier and no storage capacities, no access to LNG and no interconnections with EU Member States, the construction of the additional gas links has been a priority for enhancing Moldova's security of supply.
The first step is the Ia?i (Romania) – Ungheni (Moldova) interconnector. The 42 km long interconnector is the first and only direct gas pipeline connecting Moldova and the EU and for the very first time in history, Moldova will be able to get gas directly from the EU and international markets. The "Ungheni-Ia?i pipeline" will have a maximum transportation capacity of 1 billion m3/annually, covering around 1/3 of the gas consumption in Moldavia. In conjunction with compressors and a new 130-km-long-pipeline to be built, the new gas interconnector will deliver gas to the capital Chisinau.
The EU is supporting it both politically and financially: On 27 August 2013 the launch of the works for the realisation of the gas interconnector between Ungheni (West of Moldova) and Ia?i (East of Romania) has been inaugurated with participation of EU Energy Commissioner Oettinger. €7 million (roughly 25% of total costs) are provided via the European Neighbourhood Policy Instrument (ENPI) Cross Border Cooperation (CBC) Ukraine-Moldova-Romania programme.
The interconnector shall be finalised by mid this year.
...
This is a main reason why the Russians are shutting off the gas in the Ukraine, They've kept Moldova neutral by holding a monopoly on gas imports until the end of the month and have been using that leverage to try to get Moldova to join the Russian EU equivilant the CIS.
If Moldova really wanted to maintain it's neutrality it would join both.... Who the fuck says they can't if they are a 'neutral' country.
Only those who have never been to Moldova would think Moldova matters to Russia.
Gazprom just wants to get paid.
Only those who don't see the bigger picture would think Moldova doesn't matter to Russia or the EU for that matter.
Besides being a spigot point south of Ukraine to cut off gas via Transnistria and in turn control the Nabucco from the North, along with control from the south through Syria and West through Iran and Georgia (more on Georgia in a minute). If both the EU and Russian customs Union (CIS) were looking for trade partners to join their union's the neutral states are the next logical choices for wooing and back door arm twisting. Moldova has a fertile wine producing country for starters...
https://en.wikipedia.org/wiki/File:Nabucco_Gas_Pipeline-en.svg
The gas pipeline is not as important since the South stream project along with annexing Crimea pretty much checkmates the whole Nabucco project anyways so Moldova becomes less important as a gas transit territory now but there is that little issue of Georgia.
http://www.reuters.com/article/2014/06/10/us-moldova-georgia-idUSKBN0EL1...
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Undeterred by the conflict triggered by Ukraine's swing towards Europe, the former Soviet republics of Moldova and Georgia will sign a trade and political pact with the European Union this month with Russia warning both countries against the move.
The two small countries - Moldova has a population of just over 3.5 million and Georgia 4.5 million - see the signing of an association agreement as the crucial step towards mainstream Europe, leading to eventual membership of the powerful EU trading bloc.
...
https://en.wikipedia.org/wiki/Economy_of_Georgia_%28country%29
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Large inflows of Foreign direct investment (FDI) have been a driving factor behind a rapid economic growth in Georgia since 2003.[25]
An attractive and liberal investment environment and equal approach to local and foreign investors makes the country an attractive destination for FDI.
Stable economic development, liberal and free market oriented economic policy, 6 taxes only and reduced tax rates, reduced number of licenses and permissions, dramatically simplified administrative procedures, preferential trade regimes with foreign countries, advantageous geographic location, well developed, integrated and multimodal transport infrastructure, educated, skilled and competitive workforce presents a solid ground for successful business in Georgia.
...
Money transferred from abroad to Georgia in 2011 amounted to a record high of USD 1.26 billion, up 20.5% from 2010, according to figures released by Georgia’s central bank. Money transfers from Russia, which has been the largest source of remittances for Georgia for many years already, stood at USD 655.2 million in 2011.[29]
Among other largest sources of remittances for Georgia are: Greece with USD 144.6 million in 2011, followed by Italy - USD 109.1 million; the United States – USD 75.5 million; Ukraine - USD 52.4 million; Spain - USD 30.9 million; Turkey - USD 27.6 million; Kazakhstan - USD 26.1 million; the UK - USD 14.6 million; Israel - USD 14.3 million; India - USD 13.2 million and Germany - USD 12.9 million.
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As an aside on Iran and the general trying to wrest control of the Western feed points that is where the ISIS comes in and Iraq.
Mark my words that jihad clownshow is going to spill into Iran next under the Shia vs Sunni long standing cockfight. They are going to try to suck Iran into the conflict to protect other Shia's in Iraq opening up the ISIS to attack Iran directly at that point with the US blessing and help. It amazes me that they were allowed to march into Iraq using vehicles with markings that can be identified from above unchecked by the US drone fleet reigning missiles down on them considering Iraq is supposed to be an ally.....
Regardless of everything else the primary goal with all this Ukraine/Syria/Georgia/Iran/Turkey and all points between is the Nabucco pipeline.
Watching this shyte show, I have to say, it's a gas gas gas. For the people directly concerned though, it's rather serious.
Goverments don't survive on the support they get from providing security. That is the same "Protection Racket" that the mob uses.
They survive on the support they get from those to whom they give "SOMETHING FOR NOTHING".
The Lust for Larceny (a.k.a. externalizing costs while internalizing profits) is at the root of government as well as at the root of all evil in the world.
Hey, its a fair market price so what more can ukraine expect, especially with the IMF drilling at their kneecaps to accept loans going toward payment to russia? Maybe they can ask willy wonkberg to subsidize some of the cost.
Do they pay in potato latkes? Because I like potato latkes, OMG!
Russia wins cold war
putin- Huilo
There are no russian soldiers in Crimea, there are no russian soldiers
in Luhansk/Donetsk and I'm not a Dickhead - putin.
To function the gas line has to be kept to pressure. If customers in europe are to continue receiving and paying for gas and all intermediate valves are in Ukraine, who and how can the Russians police who gets what? As stated, Ukraine is suspect of pumping their local storage full. So now calculate how long that amount will last. Hard, huh. Now who and how will the local Ukrainian authority of non Russian simpathy distribute their unpaid gas, how will they meter it and who's meters are they? How does Russia exert authority of the pumping stations and intermediate facilities? Do they use their own people? Aren't they in danger if they do? Based on the story nothing physical happened at all. Noodleman? Brezinski? Wolfowitz? Do you either want to see Ukrainians freeze or burn? Why don't you stop this operation. It is a failure. Stop backing a losing horse.
kurt,
your imagined scenario begs the question
whether the EU nations are too dumb to notice whether
they receive the volume of Russian gas they bought and paid for.
To parse this a little finer... the last customer has no pressure? Every single stove and heater and gas powered device has a pressure regulator that works within certain tolerances under which it either bleeds or fails to operate. There are gigantic power generation systems down to a two burner stove. My question is about the plant and equipment in the middle spans, the plant and equipment out of reach of the owners.
Oh wait! We have a Certified Genious by Inheritance the Magnificent SON OF BIEDEN!
He'll fix it.
ps. Read the article carefully no gas is physically cut off my point is they can't.
My recommendation to Kiev:
Eat Moar Beenz
I suppose Ukraine is now too big to fail and i will have to pay some more of my fair share. Otherwise the entire world as we know it will collapse and burn and I will be left with nothing (even though I will be left with notihing anyways after that unfortunate boating accident....)
HOW CAN THIS BE when Ukraine has a fresh 1 billion US dollar loan! They've got fiat money hangin out the anus. Get on the phone NOW and tell Gazprom: "I'm rich, bitch!"
They used that money on zoot suits and hookers.
Western countries watching to see if Putin will compromise?? Why should he? He said what he would do and he is doing it - unlike some world leaders. Should we expect Putin to be like Boehner - where compromise is simply caving into what the Democrats want?
No one worry Obama will solve this crisis like he solved Iraq.
Well, how hard would it be for the EU to augment the volumes of their gas purchase, and pump the supplement back to the Ukr?
As long as EU is buying, I dont see Putin stopping pumping.
The suckers just have to pay for their gas. If I don't pay, I get cut off too.
"No tickee, no washee" - it's just that simple....
If my neighbor owed me 4 billion anything for past services rendered (especially when he flatly stole part of it), I'll be dammed if I would continue mowing his lawn for free!
That is business, not politics.
Unless Russia states they will only accept gold as payment, this is just a way to mine more money from the west. Not that there is anything wrong with that....
I would love for the Putin to state that any new Ukraine agreement would require payment up front or payment in gold, or both.
Well, if healthcare is a right, then free gas has got to be a right too!
Next time my internet company sends me a bill I'm going to accuse them of human right violations, discrimination and yadda yadda yadda.
The Ukraine doesn't have money either to pay the debt or buy expensive gas.
It was expected that its new friends, France or the USA, would pay for Ukraine's gas. But they have no desire. Shame on you!
BS there is money to arm and send killers shelling civilian centers.
and Kyiv says they will build complete wall/barrier against Russia
there is plenty of funds for Kyiv monsters real agenda
these are several levels of criminals