3rd 'Gas War' Looming Between Russia, Ukraine, EU
Published: August 14, 2014 (Issue # 1824)
Weather forecasters promise 32 degrees Celsius in Kiev on Thursday — which makes the near-citywide absence of hot water due to a shortage of Russian gas more bearable.
But things could get much uglier in winter, when a "humanitarian catastrophe" looms, if the confrontation between Moscow and Kiev over Ukraine's rebellious eastern regions remains unresolved and Russia turns off the gas tap, analysts said.
While political pundits say the ongoing pro-Russian insurgency in Ukraine is Moscow's last remaining leverage against Kiev, the Kremlin still has a "gas truncheon" at its disposal. Ukraine is entirely dependent on Russian gas supplies, and half of Russia's gas exports to Europe flow through its pipelines.
The gas weapon is ineffective in the summer, but a new "gas war" between Russia and Ukraine — which would be the third so far — is waiting to happen this fall, when the energy- and cash-strapped Ukraine will have to provide for its citizens and factories, experts said.
The worst case scenario is a season-long halt to Russian gas supplies to Ukraine and the European Union, which, while not leaving populations to freeze, would ground Ukraine's industrial output and cause supply disruptions in the European countries beyond.
But Kiev and Brussels are more likely either to cut a new deal with Russia — which would also suffer from the "gas war" through lost revenues — or just get gas elsewhere, though at a higher price, analysts said.
Turning Off the Tap
Technically, the third "gas war" kicked off in mid-June, when Russia stopped supplying gas to Ukraine over an unpaid bill for gas estimated by Russia's gas export monopoly Gazprom at $5.3 billion.
Russia continues to supply gas to the EU through Ukrainian pipelines. Europe bought about 160 billion cubic meters of Russian gas in 2013, according to Gazprom, providing for 35 percent of EU's total gas consumption, put by think tank Eurogas at 462 billion cubic meters.
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