Ukraine promises to return stolen Russian gas

Ukraine’s government has admitted it illegally siphoned off 1.3 BLN cubic metres of Russian gas destined for western Europe. The gas was taken last year from the pipeline that crosses Ukraine. The statement came after Russia’s energy giant Gazprom refused to negotiate a new long-term contract with Ukraine’s Naftogaz.

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August 4, 2008, 23:21

The move comes ahead of negotiations over the price Ukraine pays for its gas. The rate currently stands at 180 dollars per 1000 cubic meters, but is expected to double next year.

The country’s government says all the gas will be returned by using deposits from Central Asia.

Acting Editor-in-Chief of Russia Profile Magazine, Dmitry Babich, said it was no secret that Ukraine had been siphoning off Russian gas.

“The problem is that Ukraine simply doesn’t have enough money to buy Russian or central Asian gas at European prices,” he said. “So the big issue is what does the Ukrainian leadership make of it?"

It is the latest twist in a tangled web of Russia-Ukraine gas relations. In January 2006, Moscow briefly severed supplies to Ukraine amid a pricing dispute. The row caused panic across Europe, which receives 80 per cent of Russian gas imports through pipelines that cross Ukraine.

In October last year tensions flared again, culminating in a gas shipment to Ukraine being cut by 25 per cent in March 2008. By July, Moscow claimed the sum owed by Ukraine’s national oil and gas company stood at more than 2 billion dollars in arrears.

Critics have accused Russia of using energy supplies as a geopolitical weapon, punishing Ukraine for its increasingly pro-western policies. But Moscow insists its prices and actions are determined purely by market forces.

Vitaly Ermakov, from the Cambridge Energy Research Associates, said: "Everytime Russia and Ukraine have a dispute over gas supply, it's portrayed as a political game, pressure tactics, revenge for the Orange Revolution or something like that. But in this case I think the issue is more commercial than political."

What is for certain is that gas will continue to fuel the flames of the fiery relations between Moscow and Kiev.

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