Russia has had to start the New Year by doing something that she did not want to do. Cut the gas supply to Ukraine because of default in payments. Ukraine pressed the situation and played lots of games.
We have a saying in America: “The check is in the mail!” This saying comes about because everyone writes checks in America and mails payments through the postal service to pay bills and then tells the bill collector that “The check is in the mail!”
Ukraine was playing this same game. Ukraine said we sent payment through a mediator company. Ukraine said we paid our bill. The President of Ukraine said the bill is paid. The Prime Minister of Ukraine said the bill is paid. Other words the “Check is in the Mail!”
Russia (Gazprom) said: “You might have paid the bill, but we never got the money!”
So: In America we also like to say, ” The Postal Service has lost the payment!” It looks like the same thing has happened to Ukraine. Some one lost the 2 billion dollar payment. Ouch!
The core of the situation right now is that Ukraine has a huge supply of gas in underground storage facilities. This gas is from Gazprom and this is some of the gas that Ukraine refuses to pay for. For every cubic meter of this stored gas that Ukraine uses they are stealing from Russia. Ukraine is selling this gas to Europe and using this gas for its own uses. Ukraine also no longer has a contract for gas. This means that Gazprom can not legally ship gas to Ukraine. Russia has for years given Ukraine a huge discount on gas price. Russia calls it charity and only expects Ukraine to pay about half the normal cost of gas. The gas that was being shipped to Ukraine costs Russia 340 dollars a 1000 cubic meters. Ukraine got it for 179 dollars a 1000 cubic meters. Europe pays almost 500 dollars per 1000 cubic meters. Russia has now asked Ukraine to pay 250 dollars a 1000 cubic meters as of the 1st of the year 2009. remember this is still costing Russia 340 dollars per 1000 cubic meters……
This gas will run out soon and then Ukraine will still owe for all that gas plus fees, fines and penalties…….
Kyle & Svet
comments always welcome.