Gazprom - Naftogaz Ukrainy Dispute: Business or Politics?

Abstract

The case focuses on the dispute between the state controlled companies of the Russian Federation and Ukraine - Gazprom and Naftogaz, respectively. The case discusses in detail the evolution of Gazprom as a company and the growth of its exports to Europe. It then focuses on the disputes it had with Ukraine after the disintegration of the Soviet Union. It elaborates the impact of elections in Ukraine on the subsequent dispute that led to the cut off of gas supplies. It shows the problems of transition of an economy from state controlled subsidized system to market oriented and market determined system. It also looks at the political aspect of the case. The case also highlights the vulnerability of third parties in a dispute.

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Issues

The case is structured to achieve the following teaching objectives:

•  Recognize the problems of a comparatively smaller nation trying to break free from the influence of its dominant neighbor
• Understand the impact of subsidizing domestic energy consumption on its economy, especially when gas and oil are imported
• Realize the dependence of the European countries on gas imports from Russia
• Appreciate how a company's exports become vulnerable when its exports are routed through third parties and its efforts to gain control over such transitory routes

Keywords

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