LONDON Dec 23 Russia holds the world's largest
gas reserves and is the biggest gas exporter but tense relations
with the states across which it pumps the fuel to western Europe
have alarmed many customers over the last few winters.
The prices paid by some of Russia's neighbouring ex-Soviet
states --Ukraine, Belarus and Moldova -- are much lower than
those paid by western Europe. Moscow's attempts to make them pay
more have met with strong resistance.
Russia expects its eastern European neighbours to be paying
western European prices by 2011, coinciding with Russia's
liberalisation of domestic gas prices.
But economic crisis, particularly in Ukraine which has seen
its currency slump against the dollar over the last few months,
has made it more difficult for transit states to settle their
debts or pay more for future supplies. This has strengthened
their determination to fight the increases.
The following is a summary of disputes and price
negotiations and brief profiles of transit states.
Russia supplies Europe with a quarter of its gas needs and
80 percent of this passes through pipelines across Ukraine.
Russian gas export monopoly Gazprom (GAZP.MM) said last week
it would cut off supplies to Ukraine from January, when heating
demand is highest, as Kiev was unable to meet its debts by the
end of the year.
Gazprom said Ukraine had paid just $800 million of arrears
of its debt for supplies out of a total of $2.4 billion and
analysts say Ukraine's dire economic problems will make it very
difficult to pay the rest back.
Ukraine has been charged $179.50 per 1,000 cubic metres
(tcm) for its heating fuel this year, less than half the price
paid by consumers in western Europe, but Gazprom has threatened
to push up the price to $400 if arrears remain unpaid.
Ukraine has long haggled over how much it pays Russia for
gas and the row came to world attention in January 2006, when it
led to supplies to western European customers being halted.
In March 2008 Russia halved supplies to Ukraine, but reached
agreement to restore flows of fuel and because the cut was in
spring, not during the middle of winter, it did not affect
supplies to western Europe.
Russia's differences with Ukraine have led it to propose two
pipelines, the North Stream and South Stream, running north and
south of the EU bloc, which would bypass current transit states.
Around 20 percent, or some 30 bcm a year, of the gas Russia
exports to Europe passes through Belarus.
Belarus President Alexander Lukashenko failed on Monday to
secure a firm promise of preferential gas prices from Russia in
2009 despite warning the Kremlin that undermining its ally's
economy could backfire.
Low gas prices and financial help from Moscow are crucial
for Lukashenko's efforts to keep afloat the economy of Belarus,
a former Soviet republic that is Russia's partner in plans to
build a Slav "union state".
Belarus officials had said, before Lukashenko held talks
with Russian President Dmitry Medvedev, that they were counting
on a price of $160 per 1,000 cubic metres of Russian natural gas
in 2009 compared with the current rate of $128. Russian
officials have suggested the price will be no less than $200.
Gazprom has traditionally charged Minsk the lowest price of
any of its foreign customers and any signs it would raise prices
have been opposed by Lukashenko.
The Druzhba (Friendship) pipeline also carries Russian oil
through Ukraine and Belarus on to Europe.
During a pricing dispute with Russia in January 2007, oil
shipments through Belarus were halted for three days.
Poland is a major transit country for Russian oil and gas
exports to Europe. Both the Druzhba and the Yamal-Europe gas
pipeline pass through Poland from Russia via Ukraine and
Along with other transit states, Poland is opposed to the
Russian-German Nord Stream link, which will take Russian gas
directly to Germany under the Baltic Sea, partly because it
fears it would become vulnerable to being cut off from Russian
Earlier this year, Polish Prime Minister Donald Tusk
suggested to Russian President Vladimir Putin that an
alternative land route should cross its soil in place of the
Last year Poland rejected a demand by Gazprom for it to
lower its fees for pumping Russian gas across Polish territory
Following various disagreements with Russia, Turkey has
looked to diversify its import sources and has ambitions to be
an energy hub, rather than a transit nation for Russia.
Turkey's state-owned Botas is part of a consortium led by
Austria's OMV (OMVV.VI), which wants to build the U.S. and
EU-backed Nabucco pipeline that would transport gas from
Azerbaijan through Turkey and on to Europe, reducing dependence
Currently, the Blue Stream natural gas pipeline connects the
Russian system to Turkey.
Russia, with Italian oil company Eni (ENI.MI), has a project
to extend the Blue Stream pipeline to southern Europe through
Turkey. It will also jointly operate with Eni the South Stream
link, which would bypass Turkey.
(Compiled by Daniel Fineren, editing by Anthony Barker)