Ukrainian gas chief accuses Moscow of blackmail over energy supplies

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For a few hours on Wednesday, it was unclear exactly who was in charge. After a day of rising gas futures, the continent’s leading leader, Ursula von der Leyen, expressed anger and dismay at the uncontrollable numbers. Mr. Putin, on the other hand, subdued them almost immediately.

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At a click of a finger, and in signs of “carefully” increasing supply and “stabilization”, Mr. Putin halved prices. Two clicks, and he drew a straight line between Europe’s energy woes, a reluctance to play by his preferred gas rules.

Yes, the cold start of winter and the economic recovery had depleted reserves, the Russian president said. But it was only important because of decisions made by European leaders: to prioritize competitive spot trades over long-term natural gas contracts with Russia, which created a “speculative frenzy.” and prioritizing renewable energy over hydrocarbons, which led to “unfounded risks”.


Later, Deputy Prime Minister Alexander Novak joined more points. He said Europe’s energy crisis could be “cooled” if only the approval process for Nordstream 2 is fast-tracked. The controversial new gas pipeline, which bypasses Russia’s military adversary, Ukraine, has yet to receive certification from European anti-competitive regulators.

Yuri Vitrenko, CEO of Ukraine’s oil and gas company, Naftogaz Granthshala That the currency of Russia amounts to “blackmail”.

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“Putin wants Nordstream 2 without compliance with European regulations,” he said. “The message he’s sending is that we won’t send enough gas until you do, and that means higher prices and unhappy voters.”

The Kremlin insists that its gas business is no more than that — the business — given that it is fulfilling existing gas contracts and more. But on Thursday, the International Energy Agency claimed Moscow could add up to 15 percent of the additional capacity. Ms von der Leyen agreed, accusing Russia of deliberately withdrawing gas.

“We are very grateful that Norway is moving forward but it does not seem to be the case for Russia,” she said.

Mr Vitrenko said he was concerned about the potential for a much larger energy crisis if Russia is allowed to use Nordstream 2 without safeguards.

Under current arrangements, Gazprom, Russia’s state gas company, is obliged to pay for the transit of 40 billion cubic meters of gas per year through Ukraine. The fear is that Moscow could cause disruption by reducing volumes through Ukraine to a minimum while continuing to pay in accordance with contractual obligations for transit.

The move would not only put pressure on Ukraine’s own energy needs in the east before its own gas-producing systems come online downstream, but also undermine the safe and efficient operation of the largely Soviet-built system. Gazprom’s existing contracts with Ukraine are also due to expire in 2024.

“If NordStream 2 turns on without the competition’s compliance, we’ll have all kinds of problems,” Naftogaz’s Vitrenko said. “Security problems, technical problems, economic problems. It will be a big blow to us.”

Ukraine has been vulnerable to any new arrangements that could undermine the viability of its existing transit infrastructure. For example, the signing of long-term gas contracts between Hungary and Russia, which uses the alternative Turkstream pipeline to the south, caused a major diplomatic rift between Kiev and Budapest.

Then, Hungary responded by saying that it would decide for itself what was best for its own energy security. The reckoning for Moscow is that other European countries will now follow. The possible political repercussions of massively hiked fuel bills show that such hope is not misplaced.

But Mr Vitrenko argued the opposite, suggesting that this week’s energy crisis has given Europe a taste for what is typically Ukrainian medicine.

“Putin has shown that he wants to use gas as a weapon in Europe,” he said. “Now it is up to Europe to decide whether it is above the law or not.”


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