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stasisLAX
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Europe's Natural Gas Supplies Could Be Shut Off

Thu Jan 01, 2009 8:18 am

According to the New York Times:

"Negotiations over gas prices between Russia and Ukraine unraveled Wednesday, and executives at Gazprom, the Russian natural gas monopoly, said they would halt gas supplies to Ukraine at 10 a.m. Thursday, January 1

If the gas is cut, customers in Western Europe would likely experience shortages, since the same pipelines in Ukraine that are used for internal distribution are also used for export. That is a problem that has bedeviled Europe’s energy supplies from Russia for years. About 80 percent of Russia’s gas exports to Europe go through Ukraine.

Underlying the gas dispute are long-running tensions between Russia and Ukraine, a former Soviet republic. In 2004, after the street protests known as the Orange Revolution installed a pro-Western government in Ukraine, talks over gas supply and its transit became strained."

Source: http://www.nytimes.com/2009/01/01/bu...s/worldbusiness/01gas.html?_r=1&hp

Inside Ukraine's government, the hostile geo-political negotiations with Russia is causing much bigger governance issues for the Ukraine's greatly divided government. Pro-Western Ukrainian politicians say Putin and Medvedev have used Ukraine’s economic troubles to create greater discontent among the ruling parties and the Ukrainian public by confronting the ruling party with hardball negotiations over natural gas prices.

Russia has also charged that the pro-NATO Ukrainian ruling party provided weapons to Georgia during the Russo-Georgian War, violating agreements with Russia on arms sales in the region, and equipping the Georgian military which in turn allow them to fight Russia during the war - however, the Russian government has not provided any proof. Ukraine has also supplied arms to other countries, including Russia, and states that they have followed U.N. rules on arms sales.
"Those who would give up essential liberty to purchase temporary safety deserve neither liberty nor safety!" B.Franklin
 
OHLHD
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Thu Jan 01, 2009 8:34 am

The gas is cut between Russia and the Ukraine but Europe will not be effected.  Smile

Ukraine has assured that they won´t touch the gas that is moving though their territory to Europe. Ukraine has reserves for up to 3 months.  Smile
 
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stasisLAX
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Thu Jan 01, 2009 8:37 am



Quoting OHLHD (Reply 1):
Ukraine has assured that they won´t touch the gas that is moving though their territory to Europe. Ukraine has reserves for up to 3 months

That was very smart of Ukraine to stock up on natural gas - but why didn't this fact get mentioned in the NYT article? Did Ukraine put aside natural gas reserves secretly, and only now announced that they have reserves? Interesting to say the least  scratchchin 
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OHLHD
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Thu Jan 01, 2009 8:42 am



Quoting StasisLAX (Reply 2):
That was very smart of Ukraine to stock up on natural gas - but why didn't this fact get mentioned in the NYT article? Did Ukraine put aside natural gas reserves secretly, and only now announced that they have reserves? Interesting to say the least

I have that from here. German only:

http://www.kurier.at/geldundwirtschaft/283719.php

The article says that they just filled them up during the last months.  Smile
 
ME AVN FAN
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Fri Jan 02, 2009 12:00 pm



Quoting StasisLAX (Thread starter):
in Western Europe would likely experience

.-
in Western Europe, only parts of Germany get their natural gas supplies from Russia, while most of Western Europe depends on other supply-routes, mainly Algeria but also others including Iran. Russian supplies however ARE of vital importance in Eastern Europe, countries who possibly will start to shift their imports in view of the instability in Russia and Ukraine.
-

Quoting StasisLAX (Reply 2):
why didn't this fact get mentioned in the NYT article? Did Ukraine put aside natural gas reserves secretly

-
The article in the NYT is wrong in various points, as done by somebody with a lack of real knowledge.
 
baroque
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Fri Jan 02, 2009 12:38 pm



Quoting ME AVN FAN (Reply 4):
but also others including Iran

Iran, remind me how?????
 
ME AVN FAN
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Fri Jan 02, 2009 12:57 pm



Quoting Baroque (Reply 5):
but also others including Iran

Iran, remind me how?????

a lot of the natural gas transport is done by LNG-ships, which means LIQUEFIED natural gas. The gas on arrival at a LNG-terminal, be it at the seaport or at an inland LNG-terminal is then DEliquefied and transported to its use.
-
in case of Switzerland, most of the gas used in Switzerland is liquefied on the Algerian coast and then seafreighted to Marseille-Ouest and from there by pipeline to two LNG terminals in Switzerland, where the stuff is DEliquified for distribution. In 2008, the Swiss Foreign Minister Micheline Calmy-Rey went to Tehran to sign a new treaty by which Iran will supply Switzerland with LNG in considerable quantities, also using those Algerian-French-Swiss pipelines.
 
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par13del
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Fri Jan 02, 2009 1:16 pm

So to safeguard Western Europe gas supplies from Russia via Ukraine there needs to be a govt. in place in both countries who agree and support each other, sounds a lot like how free trade works the world over, now how is that accomplished?
 
ME AVN FAN
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Fri Jan 02, 2009 2:03 pm



Quoting Par13del (Reply 7):
So to safeguard Western Europe gas supplies from Russia

-
Again, Western Europe does not depend on Russian gas supplies. It is EASTERN Europe which at least at present does depend on Russian gas supplies. But even this may be subject to change.
 
baroque
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Fri Jan 02, 2009 2:05 pm



Quoting ME AVN FAN (Reply 6):
Quoting Baroque (Reply 5):
but also others including Iran

Iran, remind me how?????

a lot of the natural gas transport is done by LNG-ships, which means LIQUEFIED natural gas. The gas on arrival at a LNG-terminal, be it at the seaport or at an inland LNG-terminal is then DEliquefied and transported to its use.

Yes, indeed, we tend to know a bit about LNG down here for one reason and another. So do the Iranians. And their largest field, S Pars is producing domestic gas. Nuclear generated electricity would be used to save some of this gas for export.

Unfortunately for the Iranians, what they also know is the difficulty of getting an LNG project up and running.
See
http://en.wikipedia.org/wiki/Asalouyeh
and
http://www.economist.com/agenda/displaystory.cfm?story_id=11360483
The indications that Shell and, most likely, Total will not meet Iran's mid-June deadline for them to commit themselves to going ahead with their long-standing liquefied natural gas (LNG) projects reflect both the difficulties of doing business in sanctions-hit Iran and the broader problem of escalating global costs of energy schemes of this sort. Major oil and gas projects are indeed stalled in Iran, but progress is also painfully slow elsewhere; according to Petroleum Economist, an industry magazine, only four LNG projects have attained "final investment decisions" over the past 18 months (in Peru, Australia, Algeria and Angola), and all of these have also faced long delays.
Shell on the bench

In response to reports that it had pulled out of its LNG project, which entailed integrating the development of Phase 13 of Iran's South Pars gasfield with a liquefaction plant and marketing strategy, Shell issued a statement suggesting a more nuanced picture. Shell said that it had "agreed the principle of substitution of alternative later phases for the Persian LNG project so that the National Iranian Oil Company (NIOC) can proceed with the immediate development of Phase 13". This statement suggests that the two sides have agreed that the development of Phase 13 should not be delayed any longer owing to the difficulty of agreeing final commercial terms for building the LNG plant for which the gas from this phase has been designated. At the same time, Iran seems to be concerned to keep open the option of enlisting Shell's technical and marketing know-how and financial input for an LNG project linked to a future phase of South Pars.


Developing the S Pars gas in Iran as LNG would be a doddle. But the problems are that Qatar Gas (currently producing 10 mtpa) has some inside running and there are competition problems across the Gulf, but the real problem for developments in Iran is that the US keeps putting pressure on companies trying either to develop LNG or pipelines across Pakistan. The usual threat has been in relation to any operations a company may have in the US. Qatargas is proposing to go to 40 mptpa but Iranian gas would be a good back up. Perhaps Europe will mention this to the US??

For the record:

Gas reserves at end 2007:
Russia 44.65 trillion cubic metres (tcm)
Algeria 4.5 tcm
Qatar 25.6 tcm
Iran 27.8 tcm

For comparison, US 5.98 tcm and remember The Netherlands was once the world's major exporter of gas, and now has a reserve of 1.25 tcm (still ahead of the UK at 0.41 tcm).

Russia, Iran and Qatar are the only jurisdictions with more than 10 tcm published reserves of natural gas. It is unwise to underestimate the power of the Russian position.
 
ME AVN FAN
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Fri Jan 02, 2009 2:16 pm



Quoting Baroque (Reply 9):
It is unwise to underestimate the power of the Russian position.

-
There are several points to be taken into account :
-
A) Russia WANTS to export, as Russia depends on the money they can get
B) Eastern Europe DOES depend on Russia to some extent, but Russia needs the money
C) the major point is that Ukraine pays rates which are far below what Russia can get on the world market
-
In case of Switzerland, and I think this also applies to Belgium and France, "Russian gas supplies" are perceived as GERMAN supplies, and to depend on GERMAN supplies is not exactly popular over here. That a Swiss foreign minister who originates from Geneva, does her uttermost to keep Switzerland out of the Schröder arrangements is not so much of a coincidence.
 
baroque
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Fri Jan 02, 2009 2:28 pm



Quoting ME AVN FAN (Reply 10):
Quoting Baroque (Reply 9):
It is unwise to underestimate the power of the Russian position.

-
There are several points to be taken into account :
-
A) Russia WANTS to export, as Russia depends on the money they can get

Well with world consumption close to 3tcm in 2007 (BP data), only Russia, Iran and Qatar influence gas availability. Russian and US production are very similar, but look at the difference in reserves. Money is a short term issue, reserves give the long term answers.
 
Elite
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Fri Jan 02, 2009 2:33 pm



Quoting ME AVN FAN (Reply 10):

 checkmark 

As much as Russia may want to be able to threaten Europe and the rest of the Western world by shutting off the natural gas supply, they know that the entire Russian economy depends on oil exports.

Quoting ME AVN FAN (Reply 8):
Again, Western Europe does not depend on Russian gas supplies. It is EASTERN Europe which at least at present does depend on Russian gas supplies. But even this may be subject to change.

Don't some part of Western Europe depend on Russia for energy? At least partially?
 
RussianJet
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Fri Jan 02, 2009 3:50 pm



Quoting ME AVN FAN (Reply 4):
in Western Europe, only parts of Germany get their natural gas supplies from Russia



Quoting ME AVN FAN (Reply 8):
Again, Western Europe does not depend on Russian gas supplies

This is not necessarily correct. Whilst most countries in western Europe have a more diverse range of gas supplies, they do nevertheless still buy Russian gas. It is right to say that Eastern Europe is far more dependant though.
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ME AVN FAN
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Fri Jan 02, 2009 7:08 pm



Quoting RussianJet (Reply 13):
Whilst most countries in western Europe have a more diverse range of gas supplies, they do nevertheless still buy Russian gas

-
Most West European countries do NOT. But in fact almost all WILL do so if Russia shows to be a reliable and competitive supplier. But playing dirty tricks on its southern neighbour is bad marketing.
 
RussianJet
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Fri Jan 02, 2009 7:27 pm



Quoting ME AVN FAN (Reply 14):
Most West European countries do NOT

http://www.reuters.com/article/rbssE...RSS&feedName=rbssEnergyNews&rpc=22
Well, this Reuters article for one suggests otherwise.

2007 figures:
Germany bought 42% of its annual consumption from Russia.
Italy bought 28% of its annual consumption from Russia.
France bought 24% of it's annual consumption from Russia.
The UK bought 16% of its annual consumption from Russia.

Austria also bought 60%, and Finland almost all of its Gas from Russia.

Now, these figures have probably altered in 2008 due to the politics, and as I said, Western Europe has a more diverse range of supplies on the whole compared to Eastern Europe, and we could probably sit here and argue about the definition of 'most' or whatever, but it is clear that there is a very significant amount of Russian gas being bought by countries in Western Europe.
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ME AVN FAN
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Fri Jan 02, 2009 7:52 pm



Quoting RussianJet (Reply 15):
there is a very significant amount of Russian gas being bought by countries in Western Europe.

-
I don't know about the UK, but I think it got heavily reduced in case of France and Italy, beside the point that the share in question hardly means a dependance. HOWEVER, far more important is that Russia HAS the chance to get a 50%-PLUS share all over Europe if it proves to be a dependable reliable competitive supplier ! A basic problem in fact apparently is that some folks in charge in Moscow simply are still thinking USSR-wise !!
 
RussianJet
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Fri Jan 02, 2009 8:02 pm



Quoting ME AVN FAN (Reply 16):
I don't know about the UK, but I think it got heavily reduced in case of France and Italy, beside the point that the share in question hardly means a dependance. HOWEVER, far more important is that Russia HAS the chance to get a 50%-PLUS share all over Europe if it proves to be a dependable reliable competitive supplier ! A basic problem in fact apparently is that some folks in charge in Moscow simply are still thinking USSR-wise !!

It has certainly reduced in the UK, I read from one source possibly as much as to only 2% of total consumption. You are right about the dependance thing, but I just wanted to point out that significant amounts were and still are being bought in Western Europe, and in the kind of volumes that, whilst not necessarily amounting to dependance in some cases, will undoubtedly cause inconvenience if supplies are disrupted. Also, that list is not exhaustive, and only deals with the larger customers. I would be surprised if other countries (such as Spain and Portugal) do not get at least some of their gas from the Russian Federation.

As for the current situation, I feel reasonably sure that we won't see any significant disruption in supply (just my own feeling, please don't anyone ask me for evidence!), but even already today I have read reports in the Russian press accusing the Ukraine of 'unashamedly stealing' supplies they are not entitled to. Given that the Ukraine publically stated they would not do this, and appear to have fairly large reserves for such an eventuality as the current situation, I would be surprised if this was the case, and it is a predictable PR move that the Russian government would make such accusations.

As usual, we can only guess what the truth really is!
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MD11Engineer
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Fri Jan 02, 2009 8:36 pm

After the threats of cutting off Eastern Europe (and former eastern Germany) by Russia last year, the German government suggested to build up a strategic reserve for natural gas for 3-6 months similar to the one we have for crude oil since the 1970s oil crisis.
The German gas companies though are strictly opposed to such an idea, claiming that it would increase gas prices due to storage costs.
IMO, though I think their reasoning is rather that the German government has accused them of using their regional monopoly status for price gouging and they fear that the government could use such a reserve to counteract unjustified price hikes.
Technically the storage facilities for such a reserve could be built within one year:
Under much of northern Germany's plainare huge salt domes. It is easily possible to drill a hole into several of these and then use hot water to wash out a huge cavity 100 meters high, 50 meters diameter), which then can be used to store natural gas under high pressure.
This has previously been done in the 1980s under West Berlin, when the West Berlin gas works decided to abandon coal gas to move to natural gas imported from Russia. The West Berlin commanders of the Western Allied Forces feared that this could give the Soviet Union leverage to blackmail West Berlin, as during the blockade of 1948-49 and demanded that the gas workswould set up a reserve with enough gas to supply the cityfor one year.
The storage site was built about 1000 meters beneath the Grunewald forest and has been used ever since.

Jan
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kevin
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Sat Jan 03, 2009 5:11 am

Today Ukraine admitted and several Eurpoean countries confirmed that Ukraine is stealing gas from the Russia - Europe transit line.
 
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stasisLAX
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Sat Jan 03, 2009 6:39 am

Looks like they're adding another chapter to the pissing war between the Gazprom oligarchs and the Ukrainian government....

"Gazprom, the Russian gas monopoly, accused Ukraine on Friday of diverting fuel intended for Europe and using it within Ukraine. Russia had cut off natural gas supplies to Ukraine the day before over a pricing dispute. Ukrainian officials say they are withdrawing only enough gas to operate pumping stations serving the pipelines, while drawing on reserves for internal use. European nations said they had not seen any shortfalls so far. Talks between Russia and Ukraine were stalemated as Ukraine has asked for European Union mediation, an option Moscow rejected."

Source: http://www.nytimes.com/2009/01/03/wo...AINEACCUS_BRF.html?_r=1&ref=europe

And Comrade Putin is back to his usual saber-rattling again:

"Mr. Putin said any interference with Russia’s gas exports to Europe would carry “serious consequences for the transit country itself.” He did not elaborate, but Ukrainian officials did not need to be reminded that Russia issued a series of threats and provocations against Georgia, leading in part to the war last summer."

Source: http://www.nytimes.com/2009/01/02/world/europe/02gazprom.html?fta=y

[Edited 2009-01-02 22:41:48]
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baroque
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Sat Jan 03, 2009 7:46 am



Quoting RussianJet (Reply 15):
The UK bought 16% of its annual consumption from Russia.

We had a thread on the UK relying on Russian gas ??more than a year ago. I remembering bemoaning the way that the UK had squandered the N Sea gas.

But even if the UK was not relying on Russian gas, any shortfall in a country to the E (ie on what really is the supply side - pun intended) will flow through to higher prices.

We probably ought to ask Mortyman for a running account of Norwegian gas prices to work out how bad a crisis it will be!!!
 
RussianJet
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Sat Jan 03, 2009 7:57 am



Quoting StasisLAX (Reply 20):
And Comrade Putin is back to his usual saber-rattling again:

To be fair, why should he not warn the Ukraine not to steal gas when they have failed to agree terms for its supply?
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MillwallSean
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Sat Jan 03, 2009 8:03 am

Most of the former Soviet republics have or have had special deals for gas and its about these discounted rates and the debt from being late with payments that Russia and its neighbours always seems to be arguing.
If its because of gazprom wants marketrates for its gas or if its because Russia wants to give support to the more Moscow friendly of Ukrainians politicians I don't know. I am sure wiser people than me can comment on that but what should be clear is that Russia and Europe has not had any of these problems so far.

Europe buys gas from Russia whenever they offer it at rates that are cheaper than generating energy from other sources. Europe can produce energy from many sources but gas is one source widely used because its cheap. The supply of gas from Russia will fluctuate depending upon price and depending upon agreements. Thats why Italy who has pretty close cooperation with but Russia in the energy sector will be more dependent upon Russian gas than for example France who has nuclear and close cooperation with Algeria.

This saying that Europe's gas supply is threatened is a simplified version of what goes on. Western Europe can choose gas from other sources or even use other forms of energy, they might have to pay more but western Europe will not run out of gas.
Eastern Europe is different, they used to depend heavily on Russia for energy and they don't have access to a diversified supply. With their old nuclear facilities shutting down or being in the process of being shut down they are much more dependent upon gas than Western Europe.
However some of these countries are diversifying its energy supplies. New electrical cables are being laid at a faster and faster pace and the Swedish/Swiss conglomerate ABB is working overtime to supply most of the products.
This has for instance given Estonia and Latvia the option of purchasing electricity from Scandinavia if their own supplies doesn't meet demand. Now gas is a cheap alternative and purchasing from other countries might make energy more expensive, a lot more expensive but the sole dependency upon Russia isnt there anymore.
Now this is something the EU is working on, in the autumn of 2009 a new EU energy policy will see the day and its major objective is to create a Pan European distribution system of energy. Quite a few major companies and countries are against it but its still expected to go through. This will require a lot of new infrastructure to be built in Europe and primarily in Eastern Europe where money is scarce for projects like this so financing will be a hard nut to crack for the commission but one way or the other I am sure there will be a solution.

The world of gas is very interesting at the moment. Pipelines are being laid and planned. We all know about some of them, Nordstream for example between Russia and Germany and the pipelines planned from Southern Russia on to the Balkans and up to Austria.
But Libya, Algeria and Egypt are other countries whose gas will be pipelined to Europe and there are talks about bringing in SubSaharan gas through pipelines.
Europe wants to diversify its supply as much as possible. The gasproducing countries are not stupid, they are under Russia's and Irans leadership about to start a gas version of oils Opec that will set prices and deal with production levels and this is politics on the highest levels...

Interesting times for some of us indeed.
The article in New York Times seems to be written by a journalist who uses wikipedia for sources or something similar. Quite a disgrace for the journalistic profession indeed.
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ME AVN FAN
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Sat Jan 03, 2009 12:04 pm



Quoting RussianJet (Reply 17):
I would be surprised if other countries (such as Spain and Portugal) do not get at least some of their gas from the Russian Federation.

-
Not in a considerable way actually as exactly Portugal and Spain profit from their closeness to Algeria, BUT in view of the energy-sharing-system in force in continental Western Europe, it is obvious that they also might at times use Russian energy just as countries like Czechia and Slovakia and even Poland may use Algerian energy. But once again, Russia does not export gas for charity purposes but to get money. And it so is in the interest of Russia to keep the line UP and even to improve. Russia has superior reserves and could use this factor to the economic advantage of Russia. And I cannot help but to regard power-plays like the one at present played against Ukraine as a bid childish, and absolutely contra-productive.
 
RussianJet
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Sat Jan 03, 2009 12:09 pm



Quoting ME AVN FAN (Reply 24):
And I cannot help but to regard power-plays like the one at present played against Ukraine as a bid childish, and absolutely contra-productive.

Perhaps so, but there is certainly fault on both sides here. I don't think it's a particularly great marketing message to be giving certain countries vastly cheaper rates than you offer others, and also allow them to regularly default on payment. Russia is certainly not being the wisest in terms of the way it's going about this whole thing, but it seems many on this thread would like to think that they are the only ones at fault here, when in fact, as you so correctly point out, they are not a charity and sell gas to make money.
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ME AVN FAN
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Sat Jan 03, 2009 12:41 pm



Quoting RussianJet (Reply 25):
vastly cheaper rates

-
This of course is fact and is visible to any attentive person. BUT what comes over in the news now is the picture of the big ugly Russian bear molesting the nice small charming Ukrainian rabbit !
 
RussianJet
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Sat Jan 03, 2009 2:23 pm



Quoting ME AVN FAN (Reply 26):
This of course is fact and is visible to any attentive person. BUT what comes over in the news now is the picture of the big ugly Russian bear molesting the nice small charming Ukrainian rabbit !

Precisely. I would never claim that Russia is blameless or without fault, but the one-sidedness in how these things get reported can be breathtaking at times.
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stasisLAX
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Sun Jan 04, 2009 5:19 am

Hungry, Poland, Romania, and Bulgaria are reporting markedly decreased supplies of Russian natural gas that transit through Ukraine, according to today's New York Times:

"The fallout from a dispute between Russia and Ukraine over the price of natural gas spread to other Eastern European nations on Saturday, as Poland, Hungary, Romania and Bulgaria reported dwindling pressure in their gas pipeline systems. The authorities in Bulgaria said they might have to restrict gas use.

The shortages seemed contained, though, as of Saturday evening. Farther west, Germany, the largest consumer of Russian natural gas in the European Union, reported no troubles. Also, Italy, a country that lost pressure in its gas pipelines after a similar dispute in 2006, was unaffected two days after Russia halted gas shipments to Ukraine.

European Union energy officials said they would call an emergency meeting for Monday.
At issue in the dispute, which threatens to cause heating fuel shortages in Europe at the time it is most needed, is a system of gas trunk pipelines that is a legacy of the Soviet Union.

The pipelines pass through Ukraine, serving that country and sending natural gas on toward customers in Western Europe. As Russia has again tried to force higher rates on Ukraine by halting supplies, exports to the rest of the Continent are invariably put at risk."

Source: http://www.nytimes.com/2009/01/04/world/europe/04russia.html?hp
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baroque
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Sun Jan 04, 2009 10:59 am



Quoting StasisLAX (Reply 28):
The shortages seemed contained, though, as of Saturday evening. Farther west, Germany, the largest consumer of Russian natural gas in the European Union, reported no troubles. Also, Italy, a country that lost pressure in its gas pipelines after a similar dispute in 2006, was unaffected two days after Russia halted gas shipments to Ukraine.

If you know there is either going to be a demand peak or a supply shortage, you pump up the lines in advance, but that only takes you so far. With longer pipelines it does take you further, but there are limits!!!
 
RussianJet
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Sun Jan 04, 2009 11:14 am



Quoting StasisLAX (Reply 28):
As Russia has again tried to force higher rates on Ukraine by halting supplies, exports to the rest of the Continent are invariably put at risk."

Hmm, nice little biased assessment of the situation there from the NY Times. Yes, how dare those nasty folks refuse to sell gas to other countries at less than half the market rate. As someone who resides in a country where we are constantly held ransom to the whims of market fluctuations and high prices, I have little sympathy. On one hand the Ukraine wants to assert independence and difference from Russia, on the other they want preferential treatment and favours which do the Russian Federation no economic good. Make your minds up people, you can't have it both ways.
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ME AVN FAN
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Sun Jan 04, 2009 1:10 pm



Quoting RussianJet (Reply 30):
how dare those nasty folks refuse to sell gas to other countries at less than half the market rate.

-
"nasty" ? Yes, nasty in so far as the displayed lack of understanding for marketing and public relations on the side of the Russian government IS nasty. Yes, nasty in so far as the foreseeable reduction of supplies to countries like Hungary and Bulgaria amounts to a kind of international blackmail. The mistake is not with international media, but with the handling of the media by the government in Moscow.
 
RussianJet
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Sun Jan 04, 2009 1:26 pm



Quoting ME AVN FAN (Reply 31):
"nasty" ? Yes, nasty in so far as the displayed lack of understanding for marketing and public relations on the side of the Russian government IS nasty. Yes, nasty in so far as the foreseeable reduction of supplies to countries like Hungary and Bulgaria amounts to a kind of international blackmail. The mistake is not with international media, but with the handling of the media by the government in Moscow

It is correct to say there is much that can be rightly criticised about the handling and presentation of things by the Russians, but in terms of the actual principles of the situation itself there is much undeserved criticism flying around.
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Sun Jan 04, 2009 1:43 pm



Quoting RussianJet (Reply 32):
in terms of the actual principles of the situation itself there is much undeserved criticism flying around.

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Sure, but as the NYT quite clearly believed /believes that most of Western Europe took/takes most of its Natural Gas from Russia, what do you expect ? And how many people in the West know that the Ukraine still more or less paid old Soviet Union inland prices for that product ?
 
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Sun Jan 04, 2009 1:46 pm



Quoting ME AVN FAN (Reply 26):
BUT what comes over in the news now is the picture of the big ugly Russian bear molesting the nice small charming Ukrainian rabbit !



Quoting RussianJet (Reply 30):
Hmm, nice little biased assessment of the situation there from the NY Times. Yes, how dare those nasty folks refuse to sell gas to other countries at less than half the market rate

Thats sums it up 100% Im surprised we have not seen the Ukraninans sitting in a nice leather chair with the EU flag behind them lol...

Maybe its time to tell the USA what price we will buy their goods at and how much we want to pay for them and not how much they think we should pay for them?

Im sure they would stand by their arguements against Russia then and practice what they Preech ( NOT ).
 
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Sun Jan 04, 2009 1:47 pm



Quoting ME AVN FAN (Reply 33):
what do you expect ?

Don't get me wrong, I expect nothing better than this from the NY Times on the matter.

Quoting ME AVN FAN (Reply 33):
And how many people in the West know that the Ukraine still more or less paid old Soviet Union inland prices for that product ?

Of course relatively few, but it should be an easy piece of journalistic research for a paper to know that.
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Sun Jan 04, 2009 5:28 pm



Quoting RussianJet (Reply 35):
it should be an easy piece of journalistic research

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It SHOULD be indeed, and is in a way. But many journalists apparently think it is too time consuming. I however can say that most papers I know take the work to research fairly nicely and mention such things. But this of course does not apply to "boulevard-papers"
 
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Tue Jan 06, 2009 11:15 am



Quoting RussianJet (Reply 32):
but in terms of the actual principles of the situation itself there is much undeserved criticism flying around.

Well, here's some more.

Perhaps the "principals" will prevail here?

Very inconvenient news for some.

http://biz.yahoo.com/ap/090106/eu_ukraine_russia_gas.html

Quote:
AP
EU says gas disruptions 'unacceptable'
Tuesday January 6, 5:39 am ET
EU says disruptions in gas flow from Russia through Ukraine are 'completely unacceptable'


BRUSSELS, Belgium (AP) -- The European Union calls the sudden and substantial cuts in Russian gas supplies to some member states "completely unacceptable."

The 27 member states demand that supplies be restored immediately after Romania, Greece and other Balkan nations reported a complete shut off of Russian gas shipped via Ukraine.

Ukraine said Russia's Gazprom state-controlled energy company have blamed each other in the stalemate over gas prices Kiev has to pay. The EU demanded on Tuesday that the two parties resume talks immediately to seek a a definitive settlement.

KIEV, Ukraine (AP) -- Turkey, Romania, Greece and other Balkan nations reported a complete shut off of Russian gas shipped via Ukraine Tuesday, in a sharp escalation of a struggle over energy that threatens Europe as winter sets in.

Ukraine said Russia's Gazprom state-controlled energy company slashed natural gas shipments to Europe by about two-thirds, triggering the cuts.

"When all is said and done, more will be said than done".
 
MD11Engineer
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Tue Jan 06, 2009 11:29 am

It looks like a few pipelines might be build in Europe in near future, so that gas can be moved from any port or pipehead in Europe to any place. This, together with a strategic reserve, would make us more independent from cut-offs like the one happening now. Typically the time used for cutting off gas is in the middle of winter, when it hurts most.

Jan
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Tue Jan 06, 2009 11:49 am



Quoting Lumberton (Reply 37):
Very inconvenient news for some.

Of course such consequences are unacceptable. This item correctly criticises both parties for the situation we are now seeing. Regardless of the rights or wrongs of the argument that led us to these cuts, the effects are of course not acceptable to innocent third countries. I don't believe anyone here has suggested otherwise.
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baroque
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Tue Jan 06, 2009 11:49 am



Quoting Lumberton (Reply 37):
Perhaps the "principals" will prevail here?

Some of the principals appear to think that sound business principles are at stake. But outside of the negotiations, who is to know?
 
MD11Engineer
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Tue Jan 06, 2009 12:08 pm



Quoting StasisLAX (Reply 28):
Farther west, Germany, the largest consumer of Russian natural gas in the European Union, reported no troubles.


AFAIK, Germany receives a lot of Russian gas through a pipeline going through Belorus and Poland, which has not been cut off.

Jan
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Tue Jan 06, 2009 12:47 pm

Some SE Europe countries are also facing shortages. Early this morning, supplies to Bulgaria, Romania, Turkey, Macedonia, Greece and Croatia had been cut off - though Croatia got some flow back a couple of hours ago, but only a fifth of the nominal amount.
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Danny
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Tue Jan 06, 2009 1:31 pm

The whole situation shows that EU must look for alternative sources of energy than Russia. Today they cut off gas supply to blackmail Ukraine, tomorrow it will be Poland or somebody else. Its very clear that they won't hesitate to do it for their own political agenda.

Quoting RussianJet (Reply 32):
It is correct to say there is much that can be rightly criticised about the handling and presentation of things by the Russians, but in terms of the actual principles of the situation itself there is much undeserved criticism flying around.

Its very well deserved. Russia has been building pressure with Ukraine for quite a while and the gas crisis is just another episode. Why exactly do you demand double price from Ukraine compared to other countries?
 
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Tue Jan 06, 2009 1:51 pm

One thing I noticed is that the gas always gets cut off in the middle of winter, when it is really needed. An EU strategic reserve good for 3-6 months would allow us to get through the worst of winter and give us time to negotiate a deal with other suppliers and thus make us less vulnerable to blackmail.

Jan
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baroque
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Tue Jan 06, 2009 2:00 pm



Quoting Danny (Reply 43):
Its very well deserved. Russia has been building pressure with Ukraine for quite a while and the gas crisis is just another episode. Why exactly do you demand double price from Ukraine compared to other countries?

It is a bit tricky to work out what the price is because the distance to the Ukraine from the gasfields is less and the Ukraine charges transit fees on gas going WEST, but overall don't you have that the wrong way round. AFAIK, Ukraine is paying much less than other countries to the west.
http://en.wikipedia.org/wiki/Russia-Ukraine_gas_dispute

It really is quite complex, especially if you take into account the issue of lags.
http://www.businessweek.com/blogs/ru...chives/2009/01/russia-ukraine.html

In Europe, natural gas prices follow oil, and Russia is clearly of the consensus view that oil will average somewhere in the neighborhood of $60 a barrel this year. That corresponds to a natural gas price of about $350 per 1,000 cubic meters. (Here's the loose formula to get the natural gas price: divide the oil price by six, then multiply the result by 35.3).

Hence the claim by Russian Prime Minister Vladimir Putin that the demand by Gazprom, Russia's natural gas behemoth, for $250 per 1,000 cubic meters from Ukraine this year amounts to a "humanitarian gesture."

Ukraine, however, has embraced oil's most recent price band. It's arguing that oil will average $40 a barrel this year, or $235 per 1,000 cubic meters of natural gas. That's precisely what Ukraine has counter-offered to Gazprom.

(As a separate matter, if Europe truly is paying $500 per 1,000 cubic meters, as Gazprom has claimed, it is seriously overpaying. That corresponds to $84-a-barrel oil.)

(Another baffling issue is Russia's claim that it's owed a $600 million late fee on top of the $1.5 billion natural gas bill that Ukraine already has paid. That's a 40% penalty, and Ukraine is only a month late.)

The subtext is the nature of the two countries' contract, which is based not on the spot price of natural gas, or a forecast, but a formula that lags current prices by eight months. In other words, when Gazprom is retorting that it in fact could charge Ukraine $418 per 1,000 cubic meters if it so wishes, that's Russia's estimate of the price of natural gas last May.

In the end, look for the two countries to settle some place in the middle, say at $50 a barrel oil, which would entitle Gazprom to charge $294 per 1,000 cubic meters. But don't be surprised if Ukraine bends a bit more toward Russia's demand than a down-the-middle compromise; indeed, I wouldn't be surprised if Ukraine agrees to Gazprom's offer of $250 per 1,000 cubic meters.


Note the issue of lags which would mean that the current gas price should be related to the peak of oil prices in 2008!!!

Also where does Gazprom get much of its gas?
Regarding the latter, Gazprom's troubles go far. It doesn't produce much of the gas it ships to Europe, but markets gas it buys mostly from the Central Asian state of Turkmenistan. In order to obtain long-term rights to that gas, and not have it siphoned off by a covetous West, Gazprom has agreed to pay the Turkmen about $340 per 1,000 cubic meters.

Given market prices, that means that Gazprom might be forced to sell to Europe this year at a loss, unless it unilaterally cuts the price it pays to the Turkmen, who in that case could respond by withholding supplies.

"Gazprom is in a tough spot," says Kenneth Medlock, a natural gas expert at Rice University's James A Baker Institute for Public Policy, who helped me with the calculations for this article. If Gazprom loses the Turkmen supplies, Medlock said, "they are going to have trouble meeting their contractual commitments" to Europe.
 
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Tue Jan 06, 2009 5:40 pm



Quoting MD11Engineer (Reply 38):
more independent from cut-offs like the one happening now

-
I see two points :
A) It was a mistake that Germany so heavily went into this gas business with Russia
B) That countries like Poland and Hungary joined the E.U. is nice, that they however in reality retained lots of the old Comecon-originated trade relations means a defacto dependency on Russia, unless they fairly swiftly establish alternative procurement routes for the gas
 
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Tue Jan 06, 2009 6:31 pm



Quoting Danny (Reply 43):
Its very well deserved. Russia has been building pressure with Ukraine for quite a while and the gas crisis is just another episode

There has obviously been tension and games for a long time - it has certainly not been one-sided.

Quoting Danny (Reply 43):
Why exactly do you demand double price from Ukraine compared to other countries?

You don't. The Ukraine has been receiving gas from Russia at rates vastly lower than many other countries, and at nothing like accepted market rates. Russia even now is not demanding the full market rates from them. So no, I do not think it is deserved.

As I stated in an earlier post, the Ukraine cannot have it both ways. On hand, deliberately asserting its independence and sometimes beheving deliberately provocatively towards Russia in the way it does so, but yet continue to demand 'mates rates' for natural resources that Russia has every right to sell at market rates.
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MD11Engineer
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Tue Jan 06, 2009 6:41 pm



Quoting Baroque (Reply 45):
(As a separate matter, if Europe truly is paying $500 per 1,000 cubic meters, as Gazprom has claimed, it is seriously overpaying. That corresponds to $84-a-barrel oil.)

Is this the price the end customer pays or the price at which the German gas companies buy the gas from the Russians? If it is the first case (which I wouldn't be surprised if it is), then it is the effect of a f*cked up privatisation about 20 years ago, when the previously government controlled and state owned gas companies got sold to private owners, leading to a change from government and parliament controlled regional monopolies to privately owned regional monopolies.

Jan
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RE: Europe's Natural Gas Supplies Could Be Shut Off

Tue Jan 06, 2009 6:51 pm



Quoting RussianJet (Reply 47):
Russia even now is not demanding the full market rates from them.

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The problem is the methods. Russia should have sent an official termination notice one year before a set deadline, officially advising the Ukraine about new rates more in line with world market conditions. And this termination notice should have been brought to the attention of the E.U., the U.N., and the international media, specifying the reasons for the change to be.
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In former Eastern Europe, in Germany, and so in a way all over Europe, Russia now is seen rightly as unreliable, as you never really know when something happens. Hungarians, Slovaks and Poles of course know about what you mention quite well, but after this will consider alternatives, as they for sure are not ready to suffer under Russian-Ukrainians quarrelings. And in Germany, some people might consider new pipelines from Marseille and Rotterdam to the German East. While Russia in reality would have tremendous reserves to establish a decent market presence. But again, not with the methods shown at present.
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Another matter is that Russia originally justified its stoppage of the deliveries to the Ukraine with non-payment of due invoices while the Ukraine insists on having paid most of the bills. Both countries immediately said that the deliveries to other countries would not be affected, a claim which quite obviously was wrong. As THE supplier is Russia, it is the Russian reputation which suffers under this.

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