Tuesday, July 8, 2008

Russia is planning to shut off Ukraine's gas on New Year's eve again

The traditional Russian New Year's gift to Ukraine is going to be the same this year. A shut off of natural gas supplies because of a demand of even higher gas prices, at $400 per cubic meter to be exact - more than double of the current $180 Ukraine is paying. Given that 2/3rds of Ukraine's gas comes from Russia, that's a huge hit and an enormous transfer of wealth out of Ukraine into Russia. Yulia Tymoshenko has offered a reasonable idea of a 5-year price transition period to avoid the annual ultimatums and shutoffs.

'"It's not that it's unreasonable by European standards, it's just that they can't pay it. Ukraine is a gas-based economy, and they'd have to take the most enormous hit," Stern said.'

Europe faces fresh New Year Russian gas crisis
July 8, 2008

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