Thu, Jan 22, 2009 - Page 6 News List

Russian gas begins trip through Ukraine into wary Europe


Siberian gas started flowing into the EU on Tuesday, ending the bitter dispute between Russia and Ukraine that shredded both countries’ reputations as fuel suppliers and left the EU desperately seeking to shift its energy policies away from dependence on Russian monopolies.

A new 10-year deal on gas pricing and transit between the Russian and Ukrainian state gas firms, Gazprom and Naftogaz, saw Russia pumping the gas through Ukraine’s pipelines to Slovakia in the EU, with Kiev allowing the fuel to flow without interruption.

The resumption of supplies appeared to end the worst, so far, of a series of disputes of distinctly political hue between Russia and its former Soviet underling, Ukraine.

After an agreement between Russian Prime Minister Vladimir Putin and his Ukrainian counterpart, Yuliya Tymoshenko, European leaders congratulated themselves on their mediation efforts but gave warning that the three-week gas dispute served as a rude awakening.

“This has been a team effort and an effective unified voice,” European Commission President Jose Manuel Barroso said. “It is difficult to welcome something that should not have happened in the first place. It was utterly unacceptable that European gas consumers were held hostage.”

In addition to aggrieving European consumers, the dispute has cost Gazprom more than US$1 billion in lost revenue at a time of acute economic distress.

Ukraine, however, has arguably suffered more. The deal struck doubles the price Ukraine pays for its Russian gas. Kiev’s reputation has taken a hammering and its aspirations for integration with Europe and the west have been set back.

In the vicious power struggle raging in Ukraine, Tymoshenko has outdone the country’s pro-western president, Viktor Yushchenko, whom she wants to replace. The gas dispute has enabled Putin to score points against Yushchenko, too.

Some 20 countries in Europe were without Russian gas for a fortnight at the height of winter.

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