Voices from Russia

Thursday, 19 February 2015

Ukrainian Economy in the Shitter… The Truth About Russian Gas Shipments to Novorossiya

00 gas pipeline. russia. 19.02.15


A brief article published by The Financial Times suggested that fresh data published on Wednesday provided a new testimony to the depth of the abyss that the Ukrainian economy was rolling into, noting, “The Ukrainian economy is in tatters. New data out today underscores the extent of the Ukraine’s economic carnage”. Specifically, it said that industrial production collapsed by nearly one-fifth just in January, and was now down 21.3 percent versus the same period of 2014. The FT wrote, “Economists ‘only’ expected a 15 percent month-on-month contraction in industrial production. Disrupted transportation infrastructure, rocketing energy costs, and fuel shortages clobbered industrial production, along with a collapsing currency and outright civil war in the Ukraine’s eastern industrial heartlands (sic). […] This is just the latest grim data point for the Ukrainian economy, which the IMF estimates shrank by about 7.5 percent last year. The last quarter was particularly grim, with GDP contracting a staggering 15.2 percent from a year ago”. FT said that unless the recent cease-fire holds and Kiev receives hefty slugs of western aid soon, 2015 might prove almost as gloomy.


On Thursday, citing Magyar Minister-President Viktor Orbán, Bloomberg reported that Hungary wouldn’t resell Russian natural gas to the Ukraine. Orbán also said that Hungary wouldn’t support the EU’s initiative to create an energy union, saying, “The plan would require involving the EU in bilateral relationships. For us, this would be abdicating our sovereignty”. Hungary is also going to sign a new gas deal with Gazprom, which would stipulate Russian natural gas supplies for five years, and Gazprom is ready to increase gas storage volumes in Hungary. Currently, Hungary pays 260 USD (16,094 Roubles. 1,625 Renminbi. 16,152 INR. 325 CAD. 332 AUD. 228 Euros. 168 UK Pounds) per 1,000 cubic metres of gas compared with an estimated 270 USD (16,714 Roubles. 1,688 Renminbi. 16,772 INR. 338 CAD. 345 AUD. 237 Euros. 175 UK Pounds) average in Europe. Experts polled by TASS said that Gazprom might agree to Hungary’s proposal to sign a short-term gas deal along with extending a contract on Russian natural gas supplies to Hungary, which expires in 2015. A source close to Gazprom told TASS that the negotiations on extending Gazprom’s gas contract with Hungary are now at an initial stage; they’d take into account the wishes of both parties, as well as the parameters agreed during President V V Putin’s visit to Hungary. During Putin’s visit to Budapest on 17 February, the sides agreed that it was possible to give up the “take or pay” principle in gas supplies and reduce the volume of obligatory gas intake under the contracts.


On Thursday, Gazprom CEO A B Miller said, “In line with currently-acting sale and purchase agreements between Gazprom and Naftogaz Ukrainy, starting from 16.00 MSK (05.00 PST. 08.00 EST. 13.00 UTC. 23.00 AEST) 19 February 2015 Gazprom will supply 12 million cubic metres of gas a day to the Ukraine, via gas measuring units at Prokhorovka and Platovo”. Earlier, Chairman of the RF Government D A Medvedev gave orders to provide assistance to Debaltsevo and other places in Novorossiya facing a humanitarian crisis. Medvedev said, “There’s still another problem about gas supplies… by decision of the Ukrainian authorities, in any case, by a decision that hasn’t yet been cancelled, and as a result of their actions, gas isn’t supplied to many populated areas [in Novorossiya]. Despite the need for gas supplies, this isn’t taking place. I’d like the Energy Ministry to prepare proposals jointly with Gazprom on providing humanitarian aid gas supplies for the needs of these regions, unless someone takes urgent measures for their provision with gas using the customary scheme”. Meanwhile, Medvedev aide Natalia Timakova said, “Gazprom will supply gas to [Novorossiya] as humanitarian aid on a commercial basis. We’re determining the sources of financing”. A source familiar with the situation said financing would most likely involve a loan.


On Thursday, I V Plotnitsky, Chairman of the LNR Government, told the media that Russian gas has started flowing to the LNR and DNR, saying, “The gas is flowing, everything’s fine. No problems at the moment”. As Kiev discontinued gas supplies to the region, without emergency supplies, neither the LNR nor the DNR had enough gas to last until Friday morning.

19 February 2015


Sputnik International






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