The Promise of Gas for the Winter Season

Steven Petrov                                                                                                                                                                                                                                                     The Paw Print

A “winter price” of $385/thousand cubic meters has been settled

The Ukrainian president made an official statement on October 19th, ensuring his countrymen that the country will have Natural Gas for the upcoming winter season. The international forum meetings, Europe – Asia (ASEM), were where Poroshenko and Putin had the chance to discuss this important issue. The forum meetings were held in Milano, Italy and as it seems their outcome will be beneficial for Ukraine, which relies almost exclusively on the Natural Gas supply from Russia. The Ukrainian president confirmed in front of the press that the currently settled “winter price” will be valid through March 31st 2015, and that the government in Kiev will be negotiating for a much lower price for the spring and summer months of 2015.

The future potential estimates for a price that Ukraine will be able to offer for Russian Natural Gas for the period after March 31st is around $325 per thousand cubic meters. One of the largest and most politically oriented TV channels in Russia, NTV, has been following closely the current economic and political issue between Ukraine and Russia. From the Russian TV channel add, that this most current agreement between the two parties in the conflict, could be extremely beneficial for Ukraine as well as the rest of the countries in Western Europe, which are all heavily dependent on the Russian Natural gas. However, according to Poroshenko the issue and the potential “gas crisis” have still not been fully resolved.

The Ukrainian head of state expects the issue to be resolved completely on Tuesday when political representatives from Russia, Ukraine and EU will meet in Brussels to discuss all possible outcomes. The gas conflict between the two countries accelerated in June when the largest Russian Gas provider “Gazprom” cut all of its deliveries to Ukraine after a debate over the price of the commodity. The government in Moscow has estimated that “Naftogaz Ukraine” owns approximately $5.5 billion to Russia, whereas Ukraine’s calculations show a much lower number. Russia and Ukraine filed a parallel action in the Stockholm arbitration court and are now waiting for the court to revise and point out the exact price for Natural Gas for Ukraine in the past. This will also determine the exact amount that “Neftogaz Ukraine” owes to “Gazprom.”

Before the Europe-Asia forum in Milano began, the Russian leader Vladimir Putin had officially stated that Europe would see a continuous decrease in the Natural Gas supplies from Russia, if the issue with Ukraine is not resolved soon.

Throughout this inter-European crisis that has been in the center of world’s attention in the last 6-8 months, the leading Western European countries like United Kingdom, Germany, France etc. have stood firmly behind Ukraine and its right of independence. They have imposed many sanctions to Russia for its hostile and aggressive actions towards the former Soviet Union republic.

However, each and every one of these countries is well aware of their dependence on Russian natural gas and that any potential decrease or a complete cut of Russian gas supplies could easily put Europe into a recession.

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