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NEGOTIATIONS happy with the 2009 contracts, and consequently,

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NEGOTIATIONS AND
COMMENTARY BETWEEN RUSSO-UKRAINE

From its first days in
power, the new Ukrainian government called on Russia to make a fresh
renegotiation in gas relations and, in specific, to begin the agreement on
price reduction. Ukraine determination proclaimed by a number of noteworthy
talks in Moscow in March and April. While it is realized that Ukraine longing
for decrease import prices to $250-260/mcm, it is not certain whether it was
requesting rectification of the formula, or for a transition amid during which
it would receive a reduction in cost from the contractual cost. In our view Ukraine
could have been soliciting for: reduction from the base price which, even
though widely anticipated as too high, is still within the scope of prices paid
by European nations which would consequently bring about lower costs during the
entire term of the agreement until 2020, or potentially a gas price discount
determined on the premise of the existing formula for a transitional span as
was the case with Belarus and Moldova when the two nations secured a transition
period of four years until 2011 (Stern, J. 2010).

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In spite of the flurry of
negotiating activity, progress originally remained restricted. Nevertheless,
toward the beginning of April, Russian president Putin consented
in principle to the bargaining of a price reduction. In the meantime, he
focused on that Gazprom was happy with the 2009 contracts, and consequently,
these were to remain the main reason for Russia-Ukraine gas relations, as well
as if any concessions were to be made on value, Ukraine would need to concoct
(compensatory) offers worthy to Russia and Gazprom. Thusly, Gazprom CEO Aleksei
Miller focused on that a price reduction would be subject on the volumes have
taken by Ukraine, while taking note of that, Ukraine had officially taken less
gas in 1Q 2010 than was imagined by the agreement. Ukrainian prime minister
Azarov reacted that Ukraine will take only as much gas as it needs (Stern, J.
2010).

Nevertheless, Gazprom and
Naftogaz on 9 April agreed that Naftogaz will buy 36.5 bcm in 2010 rather than
33.7 bcm as beforehand envisaged in the agreement, however, Gazprom agreed
Naftogaz offstage in the beginning of a quarter was in fact, in accordance with
the deal. Even though no official articulation was made by either side,
however, on 16 April it was stated that Gazprom agreed to lessen import costs
for Ukraine in return for the utilization of several of Naftogaz?s storage
facilities. It was also announced that an offer had been made to rent the storage
facilities to Gazprom, which would have been a noteworthy business concession
by Naftogaz. Neither the size of discount offered in return and not any details
of the storage plans were uncovered by the parties to the discussions (Stern,
J. 2010).

 Besides, on the following day, Russian deputy
prime minister Sechin noted that the problem with the price decrease was still
being discussed. It later becomes known that negotiations continued in Putin’s
residence late into the evening of 20 April 2010. The following day, in
Kharkov, the intergovernmental accord between presidents Yanukovich as well as
Medvedev on the 25-year prolongation of the Black Sea Fleet rent, and also, the
contractual appendix providing for the 30% price decrease were signed (Stern,
J. 2010).

GAZPROM AND RUSSIAN
GOVERNMENT POSITION

It is regularly asked
whether if there are any dissimilarity between the perspective of Gazprom as
well as the Russian government. Since the Russian government has a controlling
concern in the company, however, directly or indirectly, it appoints as well as
approves all major personnel appointments, some have an opinion that Gazprom
serves as an economic as well as political arm of the government. This dispute
showed that Gazprom and the Russia government working together, more so, with
the company taking its crucial direction from the Russian president Putin,
likely with the tacit accord of President Medvedev who only sporadically issued
articulations. In this manner, while President Putin was in charge of Russian
decision-making during the crisis in January 2006, Putin was also clearly in
control in January 2009 (Pravda report, 2009).

LIKELIHOOD OF A MAJOR
CRISIS

The likelihood of a
noteworthy crisis in Crimea is small yet at the same time conceivable. There
should have been one in 2008 had the Ukrainian naval force deployed to enforce
Yushchenko’s announcement that BSF warships which had involved in operations off
Georgia not be permitted to return back to Sevastopol. The probability of the
crisis likely diminishes as the end of the president Yushchenko term
approaches. Polls show that Yushchenko has basically no chance of winning
reelection. Despite whether the next president is Tymoshenko, Yanukovych, or
previous rada speaker Arseniy Yatseniuk, Ukraine is probably going to seek
after modest pace in building its relations with NATO, a more measured tone on
help for Georgia, as well as more direct relations with Russia. That apparently
would bring down Moscow’s interest in any crisis regarding Crimea (Pilfer, S. 2009).

CONCLUSION

Russia–Ukraine crisis in
2009 was a historic event in Russian gas relations with Commonwealth Independent
Soviet Union countries as well as Europe; for Europe, it was also a landmark
gas as well as energy security event which will presumably have far-reaching
policy results. However, crisis in Russia–Ukraine mutual gas relations was not
in itself an amazement. Many, including ourselves, had seen it coming long ago
in the summer of 2008. The astonishment, indeed the blow, was that the two
sides enabled the dispute to escalate from disagreements about debts, costs,
and transit levies to the point where supplies to Europe were completely cut off;
and after that enabled this situation to proceed for two weeks in the middle of
winter, with genuine antagonistic humanitarian outcomes for especially
south-east European nations.

 

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