Russian gas for Ukraine and the EU. Policy and reality

Российский газ для Украины и ЕС. Политика и реальность

© 2009, Yushchenko and Tymoshenko battling for the sympathies of voters named Russian gas is “smelly”. To think that Western gas “is not sweat, and smell”.Talking about the “gas wars” between Ukraine and Russia, which has already exceeded a dozen (if you count the first, 1992, conflicts), the experts, as a rule, long and tedious list of complex and nobody understood features of gas transport systems, European (constantly changing) and international norms and rules, counting billions of cubic meters of gas and billions of dollars that someone may get or not get. In their complex mathematical calculations, they’re right — but never, never their estimates and forecasts ten years ahead, do not coincide with reality.

I have a good friend, today, popular (in Russia and Ukraine) oil and gas expert, who in 2005 at the square in front of the red building of Kyiv University named after Shevchenko (behind the mentioned monument to Taras Shevchenko) convinced me that all (North and South) flows — “bluff Gazprom”, that they will never be built, citing the fact that he worked in the press service of “Naftogaz Ukraine” has access to data unknown to me. Now he very convincingly explains why Ukraine will never win Russia gas war and why will be built any threads (even the “North 10-12” and the same southern or Turkish).He, like when arguing with me 15 years ago, is based on complex calculations (cubic meters, kilometers, dollars etc.). And now I agree with him, but not because I was convinced the numbers on which it operates. Even in those glorious days when we were 15 years younger, I told him: “Dima, you’ve got to understand: in the presence of the seller and the buyer of the transit problem is solved. Even if a bypass pipeline will cost two or three times more expensive than estimated you have to “Naftogaz”, there is one advantage: they will work always. That is, sooner or later will pay off and begin to turn a profit, even compared to the “beautiful Ukrainian GTS”.

The second, not so important, my argument was that “Gazprom” company on a global level, and if she publicly stated that will build a bypass pipeline — so she is going to build them, despite the costs.

For fifteen years my interlocutor grew up, gained experience and now, explaining why “Gazprom” will always beat “Naftogaz of Ukraine”, is based on the same arguments that I have led him 15 years ago. It is a rare example of adequate Ukrainian expert, who does not hesitate to learn from their mistakes. Moreover, I can say that out of the Ukraine oil and gas expert he (and a couple of others, which, however, politically biased, unlike my buddy) is the most appropriate and really assess the situation.

So, then and now, evaluating the balance of forces in the Ukrainian-Russian gas conflict, I’m never interested in the technical and legal details. I assume two realities:

• the supplier and the consumer can always find each other (no matter how opposed to this transit), if they really need each other;

• political needs always take precedence over economic and financial viability, whatever we may tell the media and politics.

Let me remind you that the US tried unsuccessfully to block another contract “Gas-tube”, discussed since the late 60’s, and implemented by the end of 70-ies of the last century). The result of their actions was the fact that today not only Russia, but Ukraine is not (yet) possess the capacity to produce the pipes needed for gas quality and diameter. That is, as now, sanctions have played in favour of the development at its (USSR) areas of required production, but did not stop deliveries of Russian (Soviet) gas to Europe.Therefore, even in 1992, working in the Ministry of foreign Affairs of Ukraine, when the gas conflict has not yet passed in the “gas war”, I said and wrote (memo to its leadership) that it is better to negotiate with Russia on the proposed terms (and they were for Ukraine just fine) than to pose and to ensure that transit through Ukraine will be unprofitable and Russia, and the EU. The position I argued simply: “Gazprom” any Ukrainian requests can be integrated in the price for its European customers. In the end, if Ukraine will ensure that Russian gas price will be unprofitable for Europe, it will kill your own transit (that is, will be left without money and without gas). At the same time, Russia can compensate for the loss of the European market access to Asia. Since the gas shortage will lead to an increase in its value, “Gazprom” has nothing to lose, and Ukraine will remain without money and without gas.

My “smart” executives explained to me that Russia has no pipelines to the East. And I showed them that in the 60-ies the USSR had no pipelines in the Western direction. But it’s not made to impress them.

Current situation we know. And you can assess who was right and who is wrong. I can only say that if Ukraine’s leaders listened to me in the early 90’s, now they would have modernized and expanded the GTS through which Europe was not 80% (90 years), and 90% of Russian gas. And any projects bypassing pipelines. And then with the Ukraine is really running as the largest “inscribed sack” in the world (both Europe and Russia), because such transit volumes require political stability of the territory through which they go. There would be no Maidan.

Why do I remember all this?

Because already built and North, and Turkish (instead of South) flows (and South again in the project). Moreover, Russia became the main supplier to the world market of liquefied gas. If you are going at the same time in two or three times to increase the capacity of LNG in the next five years. And Ukraine is still trying to win the “gas war” due to its transit position. Smart experts (even those who focus solely on technical indicators) has long been understood that the EU can buy Russian pipeline gas (which is cheaper than world market prices), or to say goodbye to their industry and go from the first world to the third. Ukrainian rulers still believe that some abstract West (which, of course, does not like Russia, but not going to kill myself to give her small dirty trick) definitely compensates for Ukraine, at the expense of Russia, its loss, just to Kiev and then took russophobian position.

West and was not averse, but it is not going to incur disastrous economic losses due to increased cost of gas and also to Fund unneeded Ukraine from the political and ideological reasons. The West is not against the Ukrainian-Russian war (though cold, though not hot), but just in case, if this war carries him not the losses and profits.Kiev is not able to deal with Moscow at their own expense. Europe does not want to Fund the bearing damage the “gas war.” The US probably would not refuse to support Ukraine, but they now have their internal political problems through the roof, and they can not force the EU to work against European interests. The globalist European bureaucracy are not averse to arrange a Russian dirty trick due to the collapse of not only Ukraine, but also of the European Union. But we must bear in mind that with all the European bureaucracy, no solution can be implemented at the national level, if the authorities of the respective States against. If the Baltic States, Poland, Czech Republic and Hungary can ignore the EU Directive on the admission of Asian-African migrants, while Germany (the backbone of the Treasury and the EU) the more able to bypass it was acceptable to eurobureaucrats gas Directive.

That’s all you need to know about the current gas dispute with Ukraine, ready to move into another “gas war”. The EU, of course, could (theoretically) take the side of Ukraine, but only at the cost of committing financial and economic suicide. Russia will incur losses, but not only will not die, but will not even get sick.

The last standard question is: can Moscow go on unforced concessions to Kiev? Can. But, as shown by practice and experience 27 years of “gas wars” Russian any formal assignment results in a 2 day holiday in Kiev and the subsequent ten years of Ukrainian suffering (because gas is expensive). In the current situation ten years for Ukraine — forever (lifetime). Such States — in such circumstances — not so much live.Rostislav Ishchenko

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