OPINION: Russia-Ukraine Gas Row Nothing Like 2009 ‘Price War’
WASHINGTON, June 18 (RIA Novosti), Lyudmila Chernova – The ongoing dispute on gas supplies between Moscow and Kyiv is nothing like the ‘price war’ in 2009, when Gazprom cut off gas supplies to Ukraine, Andrew McKillop, a former chief policy analyst at the European Commission Directorate General for Energy, told RIA Novosti.
“This is nothing like the 2009 ‘price war’ between Ukraine and Gazprom when several EU countries were badly hit after Gazprom cut off supplies in the middle of a very cold winter,” he said on Tuesday. “Kyiv may have hoped to create a “gas crisis” for Europe, to help their bargaining position but they chose the wrong time of year!”
The decision to stop gas deliveries to Ukraine came days after failed negotiations with Kyiv. This could have a powerful impact on both gas prices for future deliveries, and payment arrears on gas supplied to Ukraine over many years, dating as far back as the 1990’s but especially since 2009.
“The exact amount of these arrears is ‘controversial’ and a major subject of dispute,” asserted McKillop.
McKillop explained that the European Energy Commissioner Gunther Oettinger and EU political leaders knew that Ukraine’s government had been stocking huge quantities of gas so that it could be in a better bargaining position with Gazprom and Russia.
Naftogaz CEO Andriy Kobolev said on Monday that Ukraine has enough gas in underground storage to meet its needs until December.
“During that time, the Kyiv government can depict Russia as an aggressor, who has prevented not only Ukraine but downstream gas consumers in Europe from having supplies,” McKillop suggested, adding that the EU has already urged Kyiv not to deplete its natural gas storage, worried that both Ukraine and Europe could otherwise face shortages.
The expert believes that the only advantage of the current situation is that thanks to high gas storage inventories in Ukraine and the EU, and lower gas demand in summer, most EU countries do not face any serious shortage for months ahead.
“Although Mr. Oettinger claims ‘this issue should be solvable,'” McKillop believes his recommended price conditions are unrealistic, and that “these very low prices would allow Kyiv to buy more gas than it needs for domestic uses, and sell the rest to downstream gas consumers in Europe.”
“The real solution is a unified gas price in Europe, or minimum and maximum gas prices from all suppliers,” the expert claimed.
On Monday, Gazprom said it had switched Ukraine to a pre-payment system because Kyiv had not transfered funds for future gas deliveries.