New Russia-Ukraine gas war in the pipeline

26 May 2009

A new Russia-Ukraine gas war is on the anvil, as Russia feels that Ukraine is not in a position to conjure up $5 billion to fill its gas reservoirs for the coming winter and may renegade again to pay this month's gas bill.

Head of Russian gas monopoly Gazprom, Alexei Miller said yesterday that Ukraine might not be in a position to pay the entire bill for this month's gas supply, which is likely to trigger a fresh round of gas crisis in Europe.

He added that Gazprom would be forced to seek  100 per cent advance payments for gas supplies from Ukraine from the coming month onwards, if Ukrainian gas company, Naftogaz, does not pay its entire gas supply bill for May.

In January, Russia had cut off gas supplies to Ukraine on two occasions, when Naftogaz did not pay Russian state-owned energy giant Gasprom a total of $2 billion debt on gas supplied last year. (See: Gazprom to cut off European gas supplies as Russia-Ukraine talks fail /  Putin cuts European gas supplies via Ukraine)

The gas cut affected large parts of Europe, since Gazprom supplies 42 per cent of gas to Europe mainly via pipelines through Ukraine and around 20 European countries were left without supplies of gas from Russia for around two weeks at the height of the winter.

The dispute was finally settled, when Russian Prime Minister Vladimir Putin and his Ukrainian counterpart Yuliya Tymoshenko managed to finally agree on a decade-long pact on gas pricing and transit through Ukrainian pipelines to Slovakia in the EU.