Ukraine without gas: what is the Kremlin doing?

The gas issue is the cornerstone in the relationship between the Kremlin and Kiev. Due to the transit conditions of "blue fuel" to Europe, there were already two "gas wars", and a third was coming. The date of its possible offensive is known - January 1, 2020.

On this day, any of the parties to the expired transit agreement will be entitled to wrap the valve. The big question is, who would be worse off cutting off supplies - to the Russian budget or to Ukrainian and European consumers?

It will be hard for Gazprom, and therefore for Russian taxpayers. After the Maidan in 2014, it became clear that Kiev had lost political subjectivity and finally ceased to be negotiable. The domestic monopolist invested heavily in the construction of two bypass routes around Nezalezhnaya - Nord Stream-2 and Turkish Stream. Ideally, two pipelines could completely replace Ukrainian transit.

Unfortunately, Ankara has given the go-ahead for a gas pipeline that is half the capacity originally planned by Gazprom. Now, due to changes in European energy legislation, Nord Stream 2 may remain only half full. As a result of the actual failure to completely replace the Ukrainian direction, the Kremlin expressed its principled readiness to preserve transit through the Ukrainian gas transportation system after 2019. The only question is in the conditions.

In addition, there is another stumbling block. These are litigations between Naftogaz and Gazprom. The Stockholm arbitration sided with the Ukrainian company and awarded it $ 2,56 billion for the short supply of Russian gas. The domestic monopolist did not agree with such a statement of the question and challenged the decision of the arbitration. Despite the fact that the lawsuit continues, Kiev intends to recover the billions awarded to it in Stockholm, including by imposing a penalty on Gazprom’s foreign assets. The Russian side has repeatedly stated that in order to normalize relations, it is first necessary to resolve judicial claims. However, Naftogaz does not intend to backtrack.

Currently, the dispute is about the amount of gas that Kiev can get. Everything rests on the state of the gas transmission system itself. It is worn out and needs multibillion-dollar investments in modernization and maintenance. Naftogaz does not have that kind of money, and the Europeans, frightened by the level of Ukrainian corruption, are not ready to provide their hard-earned money for this. It remains to try to “shake” them out of Russia.

This can be done as follows: conclude a long-term agreement with Gazprom, for 10 years, and the maintenance of the dilapidated GTS will be assigned to the Russian budget. The volume of pumped gas in this case should be significant. The representative of the Ukrainian gas company Vitrenko said:

We are ready to offer capacities of 90 billion cubic meters per year. We give 60 billion cubic meters to the Russians, another 30 will be free for booking by other companies.

Of course, the Kremlin is not enthusiastic about these plans. The “partners” can only be encouraged to sign something like this by cutting off gas on January 1, 2020. The Russian budget is critically dependent on energy supplies to Europe. The dirty oil scandal has already hit the country's reputation and revenues. If gas supplies are also cut off, such a double blow will have the most dire consequences.

Another question is that Kiev is also at a high risk, hinting at the closure of the valve. The fact is that no “getting rid of energy dependence on Russia” in Ukraine did not happen, despite all the assurances of the Ukrainian authorities. President Putin bluntly stated:

And if there will be no transit? You understand that then there will be no reverse. After all, the reverse is virtual.

Yes, the gas supposedly received from Europe via the reverse comes from there only on paper. In fact, it is also taken from the transit pipe. Closing the valve on the border with Russia would mean cutting off supplies to Ukrainian consumers. It is possible to hold out for some time on stocks from underground storage facilities, but this will not be enough for the normal functioning of the life of a large state. The residents of Eastern Ukraine and a number of Central regions will suffer the most.

The elected president Zelensky received great support from the population, opposing himself to Petro Poroshenko. But he can very quickly lose it if his own policy is even more adventurous than that of his predecessor. The situation is extremely serious. All parties to the conflict will suffer from the third gas war, and ordinary Ukrainians and Russians will ultimately bear its financial burden.
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  1. T. Henks Offline T. Henks
    T. Henks (Igor) April 29 2019 08: 50
    Who knows the share of gas contributions to the budget and the oil share, enlighten. Putin said a year ago that gas was not the main one. A lot, but not critical. And the reputation of deliveries, it’s like an unconscious girl - doesn’t give a damn to everyone until she gives.
    1. Bakht Offline Bakht
      Bakht (Bakhtiyar) April 29 2019 11: 16
      1. Bakht Offline Bakht
        Bakht (Bakhtiyar) April 29 2019 11: 20
        And for comparison, the letter of Man and the Patriot
      2. T. Henks Offline T. Henks
        T. Henks (Igor) April 29 2019 12: 36
        Separately for oil and separately for gas it is interesting. And so it is given in general. And everywhere like that.
        1. Bakht Offline Bakht
          Bakht (Bakhtiyar) April 29 2019 12: 53
          The oil and gas sector is not divided. Finding it separately will be difficult. Budget revenues come not only from exports. The tax on natural resources is a significant share. Plus (or minus) NovaTeku state subsidies for launching LNG projects. It is unlikely that a consolidated picture can be found. Most likely it is, but it will not be in the media. They can put a note with the calculations on the president’s table. But we’ll hardly see her
        2. Bakht Offline Bakht
          Bakht (Bakhtiyar) April 29 2019 13: 03
          Maybe it will be informative. But, I'm afraid this is indigestible reading. Specialists may be interested.

  2. ibn.shamai Offline ibn.shamai
    ibn.shamai (Vanya and the bear.) April 29 2019 09: 07
    So who will be worse off, the author never said. What about Europe? Doesn’t it concern her? It concerns how. So let it itch!
    1. Victor N Offline Victor N
      Victor N (Victor n) April 29 2019 13: 22
      The author, of course, is afraid. And it scares us, for the company. And we will hope for the best, based on our own conclusions.
    2. commbatant Offline commbatant
      commbatant (Sergei) 3 May 2019 18: 34
      Quote: ibn.shamai
      So who will be worse off, the author never said. What about Europe? Doesn’t it concern her? It concerns how. So let it itch!

      They will "itch" turn to international arbitration for failure to fulfill a contract for gas supplies to the EU while seizing Gazprom's assets in European banks ... and Ukraine will run and scream like a jackal Tabaki from Mauga, which always spoke about the unreliability of the Russian Federation ....
      It is incomprehensible another:

      Unfortunately, Ankara gave the green light to the pipeline at half the capacity that was originally planned at Gazprom.

      But the Russian Federation and Turkey at the same time agreed on a preferential price for gas for Turkey, in other words, the Turks threw us again (probably not without collusion with the Americans) ....
  3. Bakht Offline Bakht
    Bakht (Bakhtiyar) April 29 2019 09: 11
    Financial losses are inevitable. You have to go for it. There is no point in concluding a contract. Stockholm arbitration has shown that contract enforcement is optional. The criterion should be the position of Europe. The simplest solution is that Russia sells gas at its border, and transit falls on the shoulders of the EU itself. But the EU refuses such an option with all its might.
    Conclusion - the transit agreement will become a lever of pressure and a noose around Gazprom’s neck. Therefore, it cannot be signed. You can discuss something subject to the rejection of judicial claims and the inability to review tariffs. But precisely for this, it is Ukraine. So you just have to stop this empty talking room.
    Another bonus of refusal of transit. SP-2 will be 100% full. As of now, SP-1 is 110% full.
    1. 2cool Offline 2cool
      2cool (Maksim ) April 29 2019 09: 47
      I support. They will fill SP-2 to 100% and ask to build SP-3 and 4. After giving up coal and nuclear energy, there is no choice. Gazprom will simply have to wait until it reaches the managers of European industry. LNG? Yes please! Russia also wins in the price of LNG. By the way, with such a maneuver, the gas price will go up. Also a plus.

      The conclusion of a transit agreement, and then, so that the money for this should. Only fools will do this twice. Finally put an end to it.
  4. Victor N Offline Victor N
    Victor N (Victor n) April 29 2019 13: 18
    No need to panic! Scandals at the bar are inevitable, but the owner of the goods is always in a better position. The situation is more complicated than it seems to the author, but not so bad. And risks are inevitable, it is important to be able and able to not only avoid them, but also fend off.
  5. Marzhecki Offline Marzhecki
    Marzhecki (Sergei) April 30 2019 06: 29
    Quote: Victor N
    No need to panic! Scandals at the bar are inevitable, but the owner of the goods is always in a better position. The situation is more complicated than it seems to the author, but not so bad. A

    Yes, where can he ...
  6. gorenina91 Offline gorenina91
    gorenina91 (Irina) 1 May 2019 09: 59
    -Fine article ...
    -But this is just an "arrangement" of all my comments on the "gas theme" ..
    -Personally, I have long and in detail and several times all this already "laid out on the shelves" ... and on this topic ...
    -As for the agreement on the transportation of Russian gas through the territory of Ukraine ... -that Russia of course will sign it ... -And it will sign for 10-15 years ... -how exactly I, too (and this period indicated) already about all this "declared" ...

    -I have already written more than once that Russia has fallen into a trap ... -that Russia will simply be obliged to sign this agreement ...- otherwise there will be no Sev Stream-2 ... -Russia is in plain text "wrote" Zap Europe, Germany " wrote "... -there is still a lot of things written in the" mandatory operating conditions "of Sev Stream-2 ... -And Russia will fulfill all this ... -It is obliged to do it ... -and our Prime Minister Medvedev confirmed it. ..
    -Those. -Russia will now have to repair and reanimate the "ukropovsky pipe" and drive gas through it ... -but where can you go ...
    -And this trap for Russia is aggravated by the fact that now Turkey can also blackmail Russia and dictate to Russia its new conditions and requirements (for gas prices, supply volumes, etc.) ...
    - Added also "dirty oil" ... - All this is not in Russia's favor ...

    -My opinion ... -to get out of this trap ... -Russia urgently needs to turn off all this "bacchanalia" with pipelines (yes, it will be very costly .., but it is simply necessary) ... -it is completely disastrous and a disastrous path for Russia ... -And completely switch to the production and transportation of LNG ... -And immediately ... -and then Russia may not have time ...

    -Otherwise ... otherwise ... - personally, I really would not like that, after some time, all my "forecasts" (still forecasts) would turn out to be a sad reality ...