Gazprom - Naftogaz Ukrainy Dispute: Business or Politics?

<< Previous

Excerpts

The issue of increase in gas prices could not be settled and with the negotiations failing to bring about any mutually agreeable price, Gazprom decided to set the price on its own. On November 22, 2005, it announced that from 2006, Naftogaz would have to pay $160 per Tcm. Ukraine, while agreeing that gas prices should be raised, held that it should be done gradually, as its economy would not be able to withstand such a large price increase in such a short time...

or or PayPal (7 USD)

Analysts felt that apart from economic aspects, there were many political aspects to the dispute. Some claimed that the sudden increase in gas prices - more than four times what Ukraine was paying, was the Russian way of punishing Ukraine's newly elected government for pursuing pro-West policies and for deciding to join NATO and the EU.Others alleged that Russia wanted to discredit the government in the parliamentary elections to be held in March 2006. But some analysts disagreed with the view that Russia was punishing Ukraine........

The Gazprom - Naftogaz dispute brought to light EU's dependence on Russian gas. With a quarter of EU's gas consumption needs met by imports from Russia, EU member countries realized the need to diversify their energy imports. While a part of their gas requirements were met by member countries' domestic production, for a major share of its consumption it had to depend on imports........

Exhibit I: Gazprom's Gas Exports to Western Europe in BCM (2000 - 2004)
Exhibit II: Gas Exports to Europe Transiting through Ukraine and Other Countries
Exhibit III: Gazprom's Production and Financial Details
Exhibit IV: World Proved Natural Gas Reserves by Region as of 01.01.2004
Exhibit V: Gazprom's Alternative Options for Gas Exports
Exhibit VI: Gazprom's 2006 Tariffs per 1,000 Cubic Metres of Gas