Moscow - Russia has rediscovered its image as a hungry bear
as it blunders too far in the latest gas spat with Ukraine, forcing
Europe from its benign disregard as temperatures plunge below zero.
The 2009 version of Russian export monopoly Gazprom's gas cuts is
different from the 2006 standoff. Like so much else, it must be viewed
through the prism of the global financial crisis and the critical
blows this has dealt to the two warring parties.
The flow of Russian gas to Europe, squeezed through the alternative
of smaller pipelines, was at just half its usual winter rate Wednesday
and left tens of thousands in EU member states without heat.
Gazprom labeled the confrontation 'unprecedented,' reflecting what
most observers and diplomats were wondering as they watched the blame
game escalate: What pushed Moscow to such drastic measures?
No one now doubts that Gazprom's credibility will be hard to
recover, and that Europe will move with new vigour to find other
suppliers, coordinate energy policy and look at nuclear alternatives.
The European Union's gas needs are met only 25 per cent by Russia,
but this figure masks the dependence of many Central and Eastern
European while, for instance, Britain imports less than 2 per cent of
its gas from Russia.
This lends itself to the theory that the Kremlin is wielding its
energy bludgeon to teach a lesson to governments aspiring to the West
while forgetting their former Soviet heartland - a view for which
Russia's military foray into Georgia in August seemed a harbinger.
The war rather successfully undercut the merit of the Baku-Tbilisi-
Ceyhan pipeline as a path for gas from the Caspian Sea, bypassing
Russia.
Gazprom is undeniably an agent of the Kremlin, its largest
shareholder who would probably still root for a change of leadership
in Kiev.
But the national champion has fallen hard. It is faced with
desperate economic concerns that the Kremlin may not want to take on,
industry analysts said.
The motivation for the standoff is 'very difficult to understand,'
said Claude Mandil, former Executive Director of the International
Energy Agency, in an phone interview with Deutsche Presse-Agentur
Wednesday.
'It is possible that it has a political background, but an
alternative explanation is that both sides are in a very bad financial
situation. Ukraine is close to bankruptcy and Gazprom will receive
much less money than it expected from its sales in 2009.'
The price of Gazprom's exports were linked in Europe to oil - and
it was only a matter of time before they also get reduced by a third,
he noted.
Gazprom earned an average of 420 dollars per 1,000 cubic metres
from gas sold to Europe this year. Low estimates put 2009 prices at
250 dollars - which Ukraine balked at in negotiations before New Year.
Kiev is banking on a more radical dive in prices, analysts said
this week, as it struggles to pay a gas bill at 179.5 billion dollars,
having just pleaded a 1.6 billion-dollar emergency loan from the
International Monetary Fund.
Gazprom, for its part, has sought a bailout from the government
after its shares slumped 75 per cent amid the financial turmoil,
shattering Gazprom's self-proclaimed goal of becoming the world's
biggest company.
Furthermore, industry experts say there is an worrying note to what
was dismissed as more muscle-flexing by Prime Minister Vladimir Putin
when he said recently that the 'era of cheap prices is at an end.'
Huge capital investment will be needed for gas extraction, they
said. This would diminish Russia's ability effectively to subsidize
gas domestically - and much less so to Ukraine.
Ukraine pays about 8.5 billion dollars per year for its blue fuel,
earning back 3 billion dollars in the same period from transit
tariffs, according to the Oxford Institute for Energy Studies.
Gazprom chief executive Alexei Miller said Kiev's debt would soon
amount to billions of dollars if the deadlock persists.
Gazprom may well be cash-strapped, but in the long term, it seems
to have earned itself years of damage control.
The only obvious upside for Russia: It may gain support for
pipeline projects bypassing Ukraine, such as the Nord Stream pipeline
to run direct to Germany.
'Whatever the causes or responsibilities, (the crisis) is a tragedy
for Gazprom,' Mandil said. 'What is at stake is the reliability of
Gazprom itself.'
USA
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