Written originally by Igor Luzenko, the 'Power of the Money' for UP
Kremlin did not manage to raise the gas prices yet (and it is unlikely to gain any substantial success there), but Putin's team can already celebrate victory. They achieved in harming Ukraine and notably without any losses from their side. It was enough to threaten about raising the gas prices and the results of this were not delayed.
Now it can be stated, that the majority of Ukrainians believe Russia capable of making a 'Gas massacre' on Ukraine and that our country is completely defenseless in the energy field etc.
Now insecurity rains in the society. Business is the first to suffer from this insecurity, - for what gas price should it prepare in the coming year? How will (if at all) the main energy dependent sectors of Ukrainian economy work? What will be the supply and what will be the demand?
Entrepreneurs need to have answers to these questions otherwise they will cut their activity. That is probably what they are doing now.
The only reason for this negative tendency is that, inside the whole country nobody managed to relay the true state of affaires to the public.
1. It is untrue that Ukraine buys gas for $50 from Russia! The process of buying is simply non – existent! There is a treaty, that states that for transit of Russian gas in the European direction Ukraine receives around 2.195% of the gas for every 100km of the way. That’s all. All of the numerical money values in the contract are notional.
2. Ukraine is not totally dependent on Russian gas. In the last few years the 'blue fuel' from Russia is only one third of the total Ukrainian consumption! For example, 17 billion of cubic meters of gas, that Ukraine hopes to receive next year as payment for transit from Russia – is approximately 25% of the total consumption. Around 20 billion cubic meters of gas is the planned extraction of the Ukrainian gas. Everything else comes from Turkmenistan, that by the way, is unable to sell its gas to Russia even for 'non-market' $60.
3. Russia cannot stop gas deliveries to Ukraine. First of all, if she does it, 'Gazprom' will suffer large penalties from its EU partners. Secondly, how can Russia plan to transport gas without paying for it, i.e. – without giving those 2.2% for every 100km to Ukraine? This is impossible on legal, physical and logical basis – why 'Naftogaz' should ever consider transporting gas for free?
4. Until 2009 a contract exists between Russia and the Ukraine, where conditions for delivery of gas to the Ukraine are stated. None of the sides can change this contract unilaterally! Even if, lets say 5 years ago, Ukraine arranged to buy the gas for $20 until 2009, legally Russia would be unable to terminate the contract. Even if she thought $2000 to be the market price. This should have been clearly explained to everyone – Ukrainians are not stupid, they do understand what a written contract is, that cannot be influenced by any future events.
5. After almost three month of Ukraine being harassed by this 'market price' the President at last spoke of defining what it is.
Where were you before Mr. Yushchenko? Where were you, when Russian media spread half – lies and outright lies as our businessmen were left ignorant of what will happen to the gas price with which they needed to plan for the year ahead? Where were you Mr. Ivchenko, Yekhanurov and Plachkov?
Will the Ukrainian authorities make the conclusion that they need to govern and not to dream?
Will the president at last understand that multiplication of foreign advisors from Washington and Brussels will not make Ukraine a country, capable to defend her interests on her territory, even in a favorable situation?
Russia has won at least the first round in the gas war. What will happen next?
