Russia cut off gas supplies to Ukraine on Sunday after Kiev
rejected Moscow's demand for a sharp rise in gas prices for 2006,
thus triggering a standoff between the two countries and causing
gas shortfalls in some European countries.
Since Russia and Ukraine keep starkly different standpoints on
the gas price hike, analysts say, it would be time-consuming for
them to settle the dispute, even if negotiations are resumed
swiftly.
The EU and the US issued statements on Monday to appeal to
Russia and Ukraine to restore talks as soon as possible.
Russia transfers 112 billion cubic meters of gas to other
European countries each year through pipelines crossing Ukraine.
Ukraine paid Russia US$50 for per thousand cubic meters of gas in
recent years, which Russia says is too low.
Last May, the two countries launched negotiations on gas price
and Russia's payments to Ukraine for using its pipelines, but the
talks stopped short of any substantial progress.
Russia wanted the gas price to be raised to US$230 per thousand
cubic meters, while Ukraine has rejected. Instead, it insists US$75
to 80 per thousand cubic meters of gas is a proper price.
Subsequently, Russia's biggest oil company Gazprom cut off gas
supplies to Ukraine on Sunday after negotiations broke down over
the price dispute.
Observers attributed the gas dispute to both economic and
political factors.
In recent years, the international oil and gas prices kept
rising, but the gas transit fee did not rise much. Therefore,
Russia wanted to sell gas to European countries west of Ukraine in
2006 at the price of US$230 to 265 per thousand cubic meters of gas
to offset its losses.
Russia insists it is not a high price to demand US$230 from
Ukraine a thousand cubic meters of gas, as Russian experts estimate
the country suffers a loss of US$3 to 4 billion for favors given to
Ukraine in gas export.
Moreover, Russia's gas price for civilian usage is even higher
than that in Ukraine, so the Russian government has been under
constant public pressure at home to lift the price for gas exported
to Ukraine.
Ukraine consumes about 80 billion cubic meters of gas each year,
among which three-fourths is imported. Economists say if price for
imported gas in Ukraine is over US$160 for per thousand cubic
meters, the country's backbone industries such as metallurgy,
chemicals and machinery will risk collapsing, and the national
economy will suffer a heavy blow.
Ukraine is unsatisfied with the fact that Russia still sells gas
to other former Soviet republics in 2006 at a price lower than 120
dollars per thousand cubic meters, saying Russia's price offer to
it is unacceptable.
Though Ukraine has agreed to buy gas from Russia at the market
price, the country required that the price be raised step by step
to render a transition period for its domestic companies, which
Russia did not consent.
In the political aspect, the Russia-Ukraine relations have
experienced a strain since January 2005, when Viktor Yushchenko
came to power after a re-run of the presidential elections.
Yushchenko, taking the country's entry into NATO and EU as
diplomatic priorities, has made clear that it would try to join
NATO before the end of 2008, which has displeased Russia greatly as
the latter fears NATO's expansion would harm its interests.
Russian President Vladimir Putin recently asked rhetorically: If
Ukraine's leader insisted on joining the alliance, why should
Russia pay its bills?
Russia is also infuriated by Ukraine's moves in some other
affairs. Ukraine has continuously criticized the affairs of the
Commonwealth of Independent States, in which Russia plays a major
role. Ukraine also gave a cold shoulder to Russia's advocation of
building a common economic bloc among the four biggest ex-Soviet
economies, including Ukraine.
Ukraine, which produces 20 billion cubic meters of gas every
year, is capable of meeting its domestic demands comfortably, but
some of its big companies have begun to reduce gas supplies to
households on the grounds of Russia's gas cutoff, thus bringing
about an anti-Russia public sentiment in Ukraine.
Analysts say that Ukraine and Russia are interdependent as to
the gas issue. Ukraine needs Russia's gas, while Russia has to
export gas to other European countries via Ukraine. The two
countries, as well as other gas-consuming nations concerned, hope
to settle the dispute as quickly as possible, but many believe it
isn't an easy task at all.
Critics here say, however, it is highly possible for Russia and
Ukraine to work out a compromised settlement to serve all sides'
interests, as the two neighboring countries have after all to
maintain and develop their relations.
(Xinhua News Agency January 4, 2006)
