Even amid the escalating tension, officials from Russia, Ukraine, and the European Union were all huddled together as of Sunday evening still trying to work out some kind of last-minute deal to dissuade Russia from cutting off Ukraine’s gas supplies for the third time since 2006 — but nothing doing. As Keith Johnson at Foreign Policy reported:
Monday morning, Gazprom, the big Russian gas firm, said it halted gas flows to Ukraine and that it won’t ship any more until Kiev pays its hefty arrears and then prepays thereafter.
Gazprom said that Ukraine was guilty of “persistent nonpayment,” and said Kiev owes it about $4.5 billion. Russian officials said they would only be willing to go back to negotiations if Ukraine settles its outstanding debt. Russian Prime Minister Dmitry Medvedev blamed Ukraine for the crisis after it rejected “very beneficial, very preferential proposals” from Gazprom.
Ukrainian leaders sounded a defiant note after the shut-off, saying the energy fight was part of a broader offensive by Moscow against the beleaguered country.
“This is not about gas. This is part of the general plan of Russia to destroy Ukraine,” said Arseniy Yatseniuk, Ukraine’s prime minister, according to the Financial Times. “Ukrainians will not pull $5 billion out of their pockets a year so that Russia can use this money to buy arms, tanks and planes and bomb Ukrainian territory.”
Ukraine can live off of its stored gas supplies for now, particularly as the northern hemisphere enters the summer months, but if this keeps up through next winter, Ukraine could be in big trouble. In the meantime, Russian gas shipments to Europe — which make up thirty percent of Europe’s total gas supplies, half of which are shipped via pipeline through Ukraine — are supposed to continue uninterrupted, but again, if push comes to shove, there may come a point when Ukraine starts siphoning off some of those pipeline shipments for its own use.
During a cutoff in Ukraine’s gas supply in 2009, exports to Europe also took a hit, with Gazprom saying that Ukraine had siphoned off deliveries destined for the EU. It then decided to halt all supplies through Ukraine.
This time, Ukrainian officials said they had adequate inventories and other supply sources to meet domestic needs at least until the end of the year.
“The Ukrainian side has prepared for this eventuality and we are ensuring reliable transit as well as supplies to domestic consumers,” Yuri Prodan, Ukraine’s energy minister, said, according to the Interfax news agency.
The EU urged Kiev not to deplete its natural-gas storage facilities, worried that both Ukraine and Europe could otherwise face shortages. The 28-country bloc relies on Gazprom for over a third of its gas imports, with some countries 100% dependent on Russian gas.
Still, Russia has a lot to lose by barging intransigently ahead, too; even if Russia can follow through with its threat to bring alternate non-Ukrainian pipeline routes online, this is an excellent reminder for European Union members of how unreliable a partner Russia is and will only reinforce their current push to look for more diversified energy sources to cut down on their Russian energy dependency — an eventual fate of which Russia is not at all a fan. Even with the new energy deal Russia just inked with China, Europe is still a major energy market that Russia and its energy-export-reliant economy cannot afford to lose.