Energy folds

October 19, 2010 § Leave a comment

NOVO-OGARYOVO. Meeting on deliveries of Russia...

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Russia cuts off natural gas to Eastern Europe: Russia would enter a deep dispute with Eastern European nations, in particular Ukraine, and cuts off the flow of natural gas. Disputes center on return to the Russian fold from the independent factions encouraged by the Untied States motivated by the many Color Revolutions. Caught in the middle, at the end of the distribution lines, is Central Europe, whose ties forged by Germany to Russia remain healthy and strong. Russia later forges an alliance with Central Europe that results in some stability, as it becomes clear that Russia has come of age as a peacemaker with further ramifications in time. (chance: 50%) – 2010: Giant Gathering Storm Clouds


Any Russia–Ukraine gas dispute refers to a number of disputes between Ukrainian oil and gas company Naftogaz Ukrainy and Russian gas supplier Gazprom over natural gas supplies, prices, and debts in the first decade of this new century. The disputes have involved politicians of both countries, and have threatened natural gas supplies in numerous European countries that depend on Russian natural gas transported through Ukraine. Russia provides about a quarter of the natural gas consumed in the European Union. Ukraine transports about 80% of Russian gas going to EU.

In 2009, both sides, Russia and Ukraine agreed for a gas delivery price for Ukraine of $450 with a 20% discount for 2009, conditional on its retaining the transit rate for 2008, and move to full European prices without discounts, effective from Jan. 1, 2010, and a 10-year contract that will run till 2019. Such agreements are intended to eliminate subjective approaches on gas issues, thus enhancing normal relations between the two countries.

Questions?

Who would gain by more radical stances of the Ukraine? Will the coercion of Ukraine into contractual commitments on gas issues come back to haunt all involved later? Coercion often has some unintended side-effects in the long run.

And who is “Central Europe” in this case? The countries most severely affected by Russian gas being cut off are Serbia, Bulgaria and Slovakia.

What if the EU were to support these three countries in investing in adequate gas storage capacity to cope with supply shocks (short term) and diversification of import sources (long term)? What if EU member states reduce dependencies on Russia too, and diversify their energy supply sources further as well?

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