Oil War between Russia and Ukraine

It seems that Ukraine is not going to sit on its hands and watch Russia cutting its gas shipments to the former Soviet nation. Naftogaz, the Ukrainian oil and gas corporation, informed Russia’s Gazprom that it would reduce the amount of transit gas shipments to European countries. A telegram from Naftogaz to Gazprom said that Ukraine was going to cut gas supplies to Western Europe by 60 million cubic meters a day.

"It means that Gazprom will supply this amount of gas to Ukraine, but it won't reach European consumers," a spokesman for the Russian natural gas monopoly, Sergei Kupriyanov said. He said the Naftogaz move will result in supplies of Russian gas to other parts of Europe dropping from some 386 million cubic meters to about 325 million a day.

Read the Rull Article [Here]

Further increasing the tensions between Ukraine and Russia, Russia's company Gazprom is cutting gas supplies. They are cutting supplies to different parts of Europe up to 61 million cubic meters a day. Gazprom is also refusing to pay fee to Ukraine although Gazprom agrues that they have paid all the fees. The butting heads of these two companies will get them nowhere. It is only futhering the tensions between the two countries. With Gazproms supplies shrinking this could begin to hurt Russia's economy even more.

Grade This Post

Oil Struggles

Gazprom said only gas piped from Russia would be affected which would make up around 25% of Ukraine's total supply. A dispute in January 2006 disrupted exports to several European countries.

Much of Europe is reliant on Russian gas piped through Ukraine but the EU says it has been assured by Gazprom its supplies will not be affected. Gazprom spokesman Ilya Kochevrin told the BBC News website that the company had informed the European Commission about the dispute.

"We think we got strong support for our position and hopefully we can settle this very soon," he said.

Read the Full Story [Here]

Russia provides 25% of Ukraine's oil, this intern provides Russia with a good economic outcome. Russia forcing the Ukraine to pay back their debt is really not realistic. A country that owes another money generally cannot pay them back on a moments notice. I believe it would be a very poor decision on Russia's part to try to collect their money from Ukraine.

One, this could negatively affect Russia's economy by cutting the oil. Two, Russia making countries more agitated, especially those that contribute to your economy, is not the best of ideas. It seems like now every time we turn around Russia is loosing an ally here, or causing more frustration and conflict with its surrounding countries. Soon Russia will end up losing all the international legitimacy and power it has gained back. Its hard to gain an ally once lost.

Grade This Post