Gazprom puts Ukraine on gas prepayment plan after failure to pay debt

[WestCoast]

From the RT article that Annushka posted:

Ukraine’s economy is in a very fragile state, and it received a $3.2 billion bailout tranche from the IMF in May, but hasn’t used this to finance its repayments to Russia. The European Commission told Moscow that Kiev would use the money to repay its gas bill, but hasn't.

And from this article on the same site:

The gas crisis is an artificial tension created by Washington and Brussels, which want to see friction between Russia and Ukraine, political expert Alexander Nekrassov told RT, adding that the West smiles every time the two can't sort out a disagreement.

RT: Gazprom says Ukraine has threatened to siphon the transit gas. Could we be looking at a repeat of 2009 – with power shortages in Europe?

Alexander Nekrassov: Basically, let’s look at it from a different point of view altogether. These talks on the gas prices basically had nothing to do with gas, because we know that the Ukrainian government is under pressure from the EU and America.

Now, America first of all does not need to have any sort of agreement in place at the moment. America needs more tension between Russia and Ukraine, and it is doing everything to keep the tension intact. I think that until we have a crisis, a sort of a civil war situation in eastern Ukraine, to try to negotiate with the Ukrainian side and expect reason and logic from it, would be probably impossible.

Manny, Alexander Nekrassov is a former Kremlin advisor what would you expect him to say? I can produce articles that say it's Russia's fault.   

[Manny]

Alexander Nekrassov is a former Kremlin advisor what would you expect him to say?

It doesn't make his opinion invalid. Merely different to yours. The difference is, his statements have some substance and an air of believability.

[WestCoast]

Alexander Nekrassov is a former Kremlin advisor what would you expect him to say?

It doesn't make his opinion invalid. Merely different to yours. The difference is, his statements have some substance and an air of believability.

And of course the opinions of other officials from other countries would have the same substance and air of believability even if they contrasted with Nekrassoy's.

[Annushka]

The only way to know if the contract was voided is to read the contract which is probably in Russian and/or Ukrainian, neither of which you speak/read.

You will not find on the Internet "contract" from the Russian side for the reason that there is a point,
Responsibility of the parties:
-disclosure or use of confidential information.
And probably during this period (from 2009) there were additional agreements.
Please, official website of "Gazprom".

http://www.gazprom.ru/

[WestCoast]

The only way to know if the contract was voided is to read the contract which is probably in Russian and/or Ukrainian, neither of which you speak/read.

You will not find on the Internet "contract" from the Russian side for the reason that there is a point,
Responsibility of the parties:
-disclosure or use of confidential information.
And probably during this period (from 2009) there were additional agreements.
Please, official website of "Gazprom".

http://www.gazprom.ru/

Annushka you are correct. As Halo pointed out contracts usually spell out what happens when, for instance, a party misses a scheduled payment. Of course the terms of the contract are confidential and not floating around on the Internet.

Annushka, Andrew is what we call in English a bullsh*t artist. In most cases, such as he comments about the Gazprom contract he has absolutely no basis for any of his comments. He knows nothing about the subject and has no sources to draw from, so he just makes stuff up.

[Manny]

Annushka, Andrew is what we call in English a bullsh*t artist. In most cases, such as he comments about the Gazprom contract he has absolutely no basis for any of his comments. He knows nothing about the subject and has no sources to draw from, so he just makes stuff up.

As opposed to a bloke who never dated a woman from the FSU, never went there, and sits in a cozy armchair in Canada arguing with only Google as a reference?

A sensible person might ask himself if Russia would bother taking Ukraine to arbitration/court if they didn't think the contract allowed them to with confidence. They wont do that knowing some legal eagle would read the contract and throw it out would they? Well, put it this way, I wouldn't go to court if that were the case. I doubt you or Halo would. I am damn sure Russia wouldn't. 

Russia has already flexed on the gas price and offered it within a comparable figure to what other countries pay with an added risk loading. But Ukraine - despite being in no position to bargain with a history of theft and non-payment - said no. Why might that be? I doubt Ukraine has some super-dooper lawyers that are so much better than Russia's. Of course, they are either playing a game or doing what their new overlords tell them to. With an endgame in mind.

Ukraine has an undeniable debt. The IMF coughed up money to help them pay it. The EU assured Russia they would. They reneged. In any court I ever went in, that would count against them. A court would want to see them show willing and pay what they could afford (no different to a guy who did not make payments on a truck or a TV - same principle). I doubt diverting money to bomb your own people counts as exceptional circumstances any more than Hank who didn't pay for his pick up truck can count whiskey as an exceptional expense that caused his default.

What Andrew is doing is applying common sense and commenting accordingly.

If you or I don't pay our gas bill, they turn it off. We don't get to debate the price or tell tall tales before they do. Ukraine did not pay its gas bill, so Russia turned it off. Last time I looked, Gazprom was not a charity. And now Ukraine has new overlords in the EU and the US, the bill falls on them. After all, they are the ones that encouraged Ukraine to turn away from Russia, funded the coup, so now they have to make good on their promises to help that country. And if those people are going to stay warm this winter, that means paying the gas bill.

If you had a bad debtor who had a history of theft and reneging on payment agreements, would you fall over yourself to offer discounts or would you put the price up and/or withdraw the service? If unsure, ask any solvent businessman you know. I know bankers such as you don't really get business, but you must remember the core principles from way back when whenever you trained.

Were I the Ukrainian prez, I would have dropped a billion or two off the debt to show willing, got round the table with Gazprom, pleaded poverty and agreed a price and terms; and not left until that deed was done. Not simply pay nothing and threaten to steal it hoping Uncle Sam will solve my problems. 

Simple, no? You don't need to have read the contract to know that. This is elementary stuff in business, Westy. Gazprom is a business, it is not Oxfam.

[TomT]

From BBC:

"Interior Minister Arsen Avakov said: 'According to local residents, they heard two big bangs just before the explosion which could indicate they were deliberate explosions.'

The energy ministry said: 'It is not the first attempted terrorist attack on the Ukrainian gas transportation system.'"


From RT:

"But within just an hour of the blast Ukraine’s acting Interior Minister Arsen Avakov blamed Russia.

The Ministry statement decried 'Sabotage of a gas pipeline in the Poltava region' as 'another attempt by Russia to discredit Ukraine as a gas partner' but didn’t back up such a strong accusation with any additional information."


Westy,

Please give us your analysis of the reason for the different slant on Avakov's comments... before Andrew does.

[Halo]

A sensible person might ask himself if Russia would bother taking Ukraine to arbitration/court if they didn't think the contract allowed them to with confidence. They wont do that knowing some legal eagle would read the contract and throw it out would they? Well, put it this way, I wouldn't go to court if that were the case. I doubt you or Halo would. I am damn sure Russia wouldn't. 

A sensible person could also ask himself why Naftogaz would commence an arbitration process, if it didn't think the contract it has is favourable to Naftogaz.  That is what litigation, and arbitration, is all about, Manny.  Both sides think they have the correct interpretation.  Both sides have legal advisors telling them they have an issue that may be ruled in their favour at an arbitration.  Andrew doesn't know which side has the correct interpretation of the contract any more than you, or I, do.

Every good lawyer will say that a bad settlement is better than a good lawsuit.  However, sometimes, parties are so entrenched, that is impossible.

Russia has already flexed on the gas price and offered it within a comparable figure to what other countries pay with an added risk loading. But Ukraine - despite being in no position to bargain with a history of theft and non-payment - said no. Why might that be? I doubt Ukraine has some super-dooper lawyers that are so much better than Russia's. Of course, they are either playing a game or doing what their new overlords tell them to. With an endgame in mind.

Yes, there was a diversion of 15% of the EU supply by Naftogaz.  That can't be denied, and Naftogaz admitted it.  However, other diversions were not by the Ukrainian state, nor by companies controlled by the Ukrainian state.   Of course there is game playing going on.  On both sides.  Part of the non payment is tied to the Ukrainian renegotiation, yet again, of the 2009 contract (as revised in 2010) in 2014, and assertions of overpayments to Gazprom. 

Arbitrations and court cases, particularly for a contract which has the complexity this one does, take time.  Furthermore, much of this is sabre rattling, as you can be certain the parties are still negotiating, even if they deny it. 

Russia is not in as advantageous a position as you seem to believe.   Gas prices are currently low, though that is seasonal and very cyclical.  If transit is cut through Ukraine, the EU could look for alternate suppliers, which is a net negative to Russia.  This is just not comparable to cutting off the gas supply to your house.  Gazprom's actions have far more reaching effects, and consequences.

Ukraine has an undeniable debt. The IMF coughed up money to help them pay it. The EU assured Russia they would. They reneged. In any court I ever went in, that would count against them. A court would want to see them show willing and pay what they could afford (no different to a guy who did not make payments on a truck or a TV - same principle). I doubt diverting money to bomb your own people counts as exceptional circumstances any more than Hank who didn't pay for his pick up truck can count whiskey as an exceptional expense that caused his default.

If this actually makes it to arbitration, the court will look at the terms of the contract, nothing more, nor less.

If you or I don't pay our gas bill, they turn it off. We don't get to debate the price or tell tall tales before they do. Ukraine did not pay its gas bill, so Russia turned it off. Last time I looked, Gazprom was not a charity. And now Ukraine has new overlords in the EU and the US, the bill falls on them. After all, they are the ones that encouraged Ukraine to turn away from Russia, funded the coup, so now they have to make good on their promises to help that country. And if those people are going to stay warm this winter, that means paying the gas bill.

If you or I enter into a contract which offsets certain costs against what we owe, we are entitled to rely on that, as well.  Naftogaz's position is that it overpaid Gazprom by $6 billion, and is entitled to an offset.  That is based on contract revisions.  So, it is not as simple as the Russian media, or some posters, would have one believe.  Note, I am not suggesting Naftogaz overpaid, nor am I suggesting Gazprom's position is correct, only that this is the basis for the conflict, and that is why they have each submitted cases to an independent arbitrator. 

[Manny]

Halo, you are overlooking who has the power here. If Russia completely switched off the gas, they cant even steal it. They have other pipelines to supply Europe and another in progress. Not ideal volumes, granted, but Ukraine could be totally prevented from even stealing it if transit gas was switched off.

This is Russia's gas, they can sell it to who they want at whatever price they want.

Added to which, we assume Ukrainian consumers are paying Naftogaz for gas Naftogaz is stealing? How happy will they be with that? Naftogaz steals it for free and sells it on?

A sensible president would sit around the table and work out a deal on price, and repaying debts. One that he actually means, not just lies.

Likewise, a sensible president would sit down and discuss a ceasefire, and the eastern regions breaking away, as they surely will eventually anyway - come what may, as it is already known that those places will never be given to the US/NATO/EU while in the Russian sphere of influence. Russia needs land access to Crimea to protect itself against an expansionist west.

How is this stuff not blatantly obvious to most?

[Halo]

You may wish to expand your news sources beyond RT, Manny.

Poroshenko has announced a ceasefire is close to being implemented, perhaps by the end of the week.

The overwhelming majority of the residents of the Donetsk triangle, let alone the Lugansk and Donetsk oblasts, which are both predominantly ethnically Ukrainian (see the map I posted in The View from the Ukrainian Side), do not support breaking away from Ukraine.

As for Russia's power, you overstate the case.  I never stated Russia can't sell its gas to whomever it wishes to sell to.  The point is not that Ukraine can be bypassed or cut off.  It is that Russia has, yet again, used Gazprom as a political tool.  The EU knows this, and therefore, it will have an effect on how the EU proceeds in the future.  Of course Gazprom now has China, but reports are the Chinese price is at a more favourable rate than that which the majority of the EU pays.

Today, the Canadian government gave approval to the Northern Gateway pipeline.   That will allow the movement of bitumen and gas to China.  TransCanada has been lobbying to change, and to upgrade, pipelines flowing east (where there are refineries), particularly with delays for approval of the US Keystone Pipeline.  Our PM, an economist by training, views diversification of our markets for oil and gas as critical.  It is only a matter of time before TransCanada's proposals are approved.  Iran is supposed to be coming back online, and it holds the world's second largest reserves of natural gas.  So, there are plenty of other options which will be available should Gazprom overplay its hand.

[Manny]

Poroshenko has announced a ceasefire is close to being implemented, perhaps by the end of the week.

If he isn't lying this time, maybe we'll discuss this next week with Ukraine and the regions at peace.

[WestCoast]

Annushka, Andrew is what we call in English a bullsh*t artist. In most cases, such as he comments about the Gazprom contract he has absolutely no basis for any of his comments. He knows nothing about the subject and has no sources to draw from, so he just makes stuff up.

As opposed to a bloke who never dated a woman from the FSU, never went there, and sits in a cozy armchair in Canada arguing with only Google as a reference?

Why would I need to have dated a FSUW or visited the FSU to discuss these subjects on RUA? Andrew and others are in heated discussion over mercenaries, CIA tactics, US/UK/NATO/Russian military tactics, political disinformation and many other political and military subjects. Where's Andrew getting his info from? His 30 year career in the Royal Marines? No, he's either googling it or making it up.
 

[WestCoast]

Annushka, Andrew is what we call in English a bullsh*t artist. In most cases, such as he comments about the Gazprom contract he has absolutely no basis for any of his comments. He knows nothing about the subject and has no sources to draw from, so he just makes stuff up.

A sensible person might ask himself if Russia would bother taking Ukraine to arbitration/court if they didn't think the contract allowed them to with confidence. They wont do that knowing some legal eagle would read the contract and throw it out would they? Well, put it this way, I wouldn't go to court if that were the case. I doubt you or Halo would. I am damn sure Russia wouldn't. 

Russia has already flexed on the gas price and offered it within a comparable figure to what other countries pay with an added risk loading. But Ukraine - despite being in no position to bargain with a history of theft and non-payment - said no. Why might that be? I doubt Ukraine has some super-dooper lawyers that are so much better than Russia's. Of course, they are either playing a game or doing what their new overlords tell them to. With an endgame in mind.

Ukraine has an undeniable debt. The IMF coughed up money to help them pay it. The EU assured Russia they would. They reneged. In any court I ever went in, that would count against them. A court would want to see them show willing and pay what they could afford (no different to a guy who did not make payments on a truck or a TV - same principle). I doubt diverting money to bomb your own people counts as exceptional circumstances any more than Hank who didn't pay for his pick up truck can count whiskey as an exceptional expense that caused his default.

What Andrew is doing is applying common sense and commenting accordingly.

If you or I don't pay our gas bill, they turn it off. We don't get to debate the price or tell tall tales before they do. Ukraine did not pay its gas bill, so Russia turned it off. Last time I looked, Gazprom was not a charity. And now Ukraine has new overlords in the EU and the US, the bill falls on them. After all, they are the ones that encouraged Ukraine to turn away from Russia, funded the coup, so now they have to make good on their promises to help that country. And if those people are going to stay warm this winter, that means paying the gas bill.

If you had a bad debtor who had a history of theft and reneging on payment agreements, would you fall over yourself to offer discounts or would you put the price up and/or withdraw the service? If unsure, ask any solvent businessman you know. I know bankers such as you don't really get business, but you must remember the core principles from way back when whenever you trained.

Were I the Ukrainian prez, I would have dropped a billion or two off the debt to show willing, got round the table with Gazprom, pleaded poverty and agreed a price and terms; and not left until that deed was done. Not simply pay nothing and threaten to steal it hoping Uncle Sam will solve my problems. 

Simple, no? You don't need to have read the contract to know that. This is elementary stuff in business, Westy. Gazprom is a business, it is not Oxfam.

As for Gazprom contracts and the Ukraine-Russian dispute, if you think you're qualified to discuss the intricacies of international law and politics then I'm more than qualified to discuss the FSU and FSUW.

[Halo]

Poroshenko has announced a ceasefire is close to being implemented, perhaps by the end of the week.

If he isn't lying this time, maybe we'll discuss this next week with Ukraine and the regions at peace.

Poroshenko has not declared previously that a ceasefire was in effect, or even close to being reached.  He has stated all along that certain objectives must be reached, and once that is done, a ceasefire can be negotiated.  Throughout (keeping in mind he has only been president for 10 days), he has also been discussing with Putin and EU leaders the need for a ceasefire.  Putin advised Hollande that he had influence, but not total influence, over events in Ukraine.  Unless, of course, the French are lying too.

[Donhollio]

 Where does the UK get its natural gas from, and how is it delivered?

[SOUTHERN X]

A sensible person might ask himself if Russia would bother taking Ukraine to arbitration/court if they didn't think the contract allowed them to with confidence. They wont do that knowing some legal eagle would read the contract and throw it out would they? Well, put it this way, I wouldn't go to court if that were the case. I doubt you or Halo would. I am damn sure Russia wouldn't. 

 
russia /gazprom has gone to arbitration before with its customers,
oddly enough it has had rullings against it in many of those cases

bullys like to bluff & bluster , especially when bullying /negotiating with weaker customers
who are largely dependant on their product or service , or so they think


imo ukraine is being resolute in standing firm on negotiating a beter deal

SX

[WestCoast]

A sensible person might ask himself if Russia would bother taking Ukraine to arbitration/court if they didn't think the contract allowed them to with confidence. They wont do that knowing some legal eagle would read the contract and throw it out would they? Well, put it this way, I wouldn't go to court if that were the case. I doubt you or Halo would. I am damn sure Russia wouldn't. 

 
russia /gazprom has gone to arbitration before with its customers,
oddly enough it has had rullings against it in many of those cases

bullys like to bluff & bluster , especially when bullying /negotiating with weaker customers
who are largely dependant on their product or service , or so they think


imo ukraine is being resolute in standing firm on negotiating a beter deal

SX

Gazprom lost in its arbitration against Lithuania recently. Lithuania said they were overcharged by about 1.3 billion euro. As a result the price paid by Lithuania will drop by at least 20% starting July 1.

http://en.itar-tass.com/economy/731412

[Manny]

Where does the UK get its natural gas from, and how is it delivered?

Very little of ours comes from Russia, and what does comes indirectly via Europe. Much of ours is North Sea gas.

[Dogsoldier]

From Norway now.

[MrMann]

There's an interesting discussion of gas prices here: http://www.bne.eu/content/exactly-what-fair-price-ukraine-pay-russian-gas

[TomT]

If he isn't lying this time, maybe we'll discuss this next week with Ukraine and the regions at peace.

Of course he's lying; it's the cultural norm.

[Halo]

If he isn't lying this time, maybe we'll discuss this next week with Ukraine and the regions at peace.

Of course he's lying; it's the cultural norm.

Ukrainians are no more nor less honest than the citizens of any other country in the world.

However, if you actually believe this is a cultural norm, then it is so across the FSU, as the people of all the former Soviet Union generally share the same culture.  So, then it is a "cultural norm" to lie in all fifteen former Soviet republics.

[Rasputin]

Poroshenko has announced a ceasefire is close to being implemented, perhaps by the end of the week.

If he isn't lying this time, maybe we'll discuss this next week with Ukraine and the regions at peace.

He has stated all along that certain objectives must be reached, and once that is done, a ceasefire can be negotiated. 

Exactly, one of the conditions is that Ukraine controls its border with Russia before any ceasefire: «Ключевым элементом этого плана является перекрытие госграницы. Существуют огромные риски, что прекращением огня воспользуются преступники», — сказал президент Украины.

It would be suicidal to unilaterally cease all military options leaving the border open for even more mercenaries and heavy artillery and weapons to cross. The plan is to create a corridor to allow those Russians in Ukraine to leave once the border zone is safely under the control of the state of Ukraine.

Source: http://inforesist.org/poroshenko-ukraina-v-odnostoronnem-poryadke-prekratit-ogon-na-vostoke/

[TomT]

... as the people of all the former Soviet Union generally share the same culture. 

I don't agree that the people of all the former Soviet Union generally share the same culture. Of course, this has nothing to do with the price of gas.

[andrewfi]

Poroshenko has announced a ceasefire is close to being implemented, perhaps by the end of the week.

If he isn't lying this time, maybe we'll discuss this next week with Ukraine and the regions at peace.

Poroshenko has not declared previously that a ceasefire was in effect, or even close to being reached.  He has stated all along that certain objectives must be reached, and once that is done, a ceasefire can be negotiated.  Throughout (keeping in mind he has only been president for 10 days), he has also been discussing with Putin and EU leaders the need for a ceasefire.  Putin advised Hollande that he had influence, but not total influence, over events in Ukraine.  Unless, of course, the French are lying too.

Poroshenko has been taking lessons (or dictation) from his masters on the art and practice of using redefinition of the meaning of words to frame a discussion  or narrative. The 'ceasefire' is only a ceasefire if you define the word as a synonym of the words 'unconditional suurender'. If it were not so crudely done it'd be genius.

Of course the audience is not any person living in Ukraine but is headline fodder for media in the US and Europe. Given that realisation the effect will probably serve the desired purpose.

Rather than discussing a ceasefire can I suggest that you first do yourselves the favour of reading the 'terms' of the purported offer. Perhaps consider the words in the context of other announcements made in the last few days in respect of resettlement, both  voluntary and forced.