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Kiev to Gazprom: Thanks, But No Thanks


As Ukraine prepares for a hugely important vote on a free trade deal with the EU later this month, it is becoming more defiant toward its former Soviet master. Kiev has long sought to reduce its dependence on expensive Russian natural gas, and as of last Friday Ukraine’s state-owned gas firm has ceased importing gas from Gazprom.

This comes on the heels of recent high-profile energy deals made with foreign oil majors to develop gas reserves in Ukrainian shale beds and in the Black Sea. Ukraine also skipped out on paying its Gazprom bill last month, prompting harsh words from the Kremlin and leaving many to wonder if we’d see a new installment of the “gas wars” wherein Russia shut off gas to Ukraine mid-winter in 2006 and 2009.

But a lot has changed since 2009. Ukraine has worked to diversify its energy imports, and claims to have stockpiled enough gas to last it through the winter, even without its Russian supply. And with a free trade and association deal with the EU on the table, it’s in a much stronger position to snub Russian gas and cut the strings Moscow likes to attach to its energy exports. But fundamentally, as Reuters reports, this stoppage is about pricing:

Ukraine, which pays around $400 per 1,000 cubic metres of Russian gas, one of the highest prices in Europe, has asked Moscow to ease terms it considers excessive and unaffordable for its debt-strapped economy. It has been steadily reducing its Russian gas intake.

Ukraine’s shift away from Russia and toward the West is one of the most important geopolitical stories of our time. Losing Ukraine would be a significant blow to Putin’s legacy, and with Kiev looking more impervious to Russia’s favorite bit of leverage—hydrocarbons—that loss is looking more and more likely.

[Ukranian President Viktor Yanukovich photo courtesy of Shutterstock]

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  • Pete

    The Evil Empire –and that’s exactly what the USSR was — continues to crumble.

    Saints be praised.

  • Maynerd

    It’s reassuring to witness the rule of law and (relative) freedom triumph over a threatening kleptocracy. Europe has its issues but Putin’s Russia is little more than the Mafia with UN membership.

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