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Monday, September 11, 2006

Kommersant Exposes Russian Energy Imperialism

Kommersant reports that Russia is engaged in a full-scale cold war against Ukraine, with several outrageously imperlialistic goals: (a) seize control of existing gas and oil pipelines in Ukraine; (b) seize control of Ukraine's energy sector; (c) block the development of pipelines from central Asia to Europe through Ukraine. This naked Neo-Soviet aggression against Ukraine, when added to the recent Russian effort to foment a coup d'etat against Georgia, is terrifying and cries out for immediate and concerted action by the world if it wishes to avoid another protracted period of struggle with a totalitatarian Russia. Kommersant paints the ugly picture:

Kommersant has learned that Gazprom has promised Ukraine to keep gas prices at $95 per thousand cubic meters until the end of the year. In return, the gas giant is demanding a share in the country's assets and a return to the question of control over its main gas pipelines. Russia's position is so harsh that Ukraine has apparently joined the global ranks of Gazprom's foes. Yesterday Ukrainian president Viktor Yushchenko announced that the country's new energy strategy calls for the beginning of gas deliveries from a shelf in the Caspian Sea and participation in a project to deliver gas from the region to Europe via a pipeline that would bypass Russia.

Talks between Gazprom chief manager Aleksey Miller and Ukrainian prime minister Viktor Yanukovych concerning the regularization of the energy balance between Ukraine and Russia for late 2006 and early 2007 were concluded on Thursday. According to Kommersant's sources, Ukraine was assured that it would not be left without gas and that, despite the fact that Gazprom will begin to buy Turkmen gas for $100 per cubic meter in October, Ukraine will still be able to purchase its gas for $95 until the end of the year. However, this does not come without a cost. In return, Gazprom is demanding control over Ukraine's major gas arteries and the opportunity to purchase stakes in the country's fuel and energy sectors. Ukraine's leadership is opposed to both demands, and it is possible that the situation could lead to another escalation of the conflict over gas between the two countries. The workings of both countries' gas industries still happen behind closed doors, with few comments from either side. However, yesterday Yushchenko announced that he had reached an agreement with Azeri president Ilham Aliyev to create a gas transport network to deliver gas from the Caspian Sea to Western Europe. The planned network would cut Russia out of the loop entirely. Russia is, unsurprisingly, taking steps to head off such construction. In May, Russian president Vladimir Putin even promised to buy gas from Kazakhstan for $140 per thousand cubic meters (the current price is $65) in exchange for reassurances that the country will not build pipelines that would cut Russia out of its delivery network. A similar offer was made to the president of Turkmenistan. On September 6, Aleksey Miller signed an agreement with Turkmen president Saparmurat Niyazov to buy 162 billion cubic meters of Turkmen gas for $100 per cubic meter (the current price is $65) in 2006-2009. During the signing, President Niyazov assured the Gazprom chief that all of the gas will be delivered through Russia and that Turkmenistan is not interested in a trans-Caspian pipeline. However, the US, which has good relations with Ukraine and Poland, is lobbying hard for the pipeline. According to the Polish media, the country's prime minister will visit Washington next week to discuss financing (Poland needs to commit $5 billion to the project). Similar negotiations with Ukraine are possible, meaning that the chances of such a pipeline being built are increasing slowly but surely.

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