Eurasia Energy Policy by HC120727152944


									  Eurasia Energy

        Case Study
Russia – Ukraine Relations

                 Vittorio Pagliaro
Entire Region
Baltic, Central-Eastern Europe, Balkans
Caucasus and Central Asia
                     What is Eurasia?
   Eurasia is the landmass
    made of the continents
    of Europe and Asia
   With the dissolution of
    the Soviet bloc, new
    developments are
    sweeping through
   The Former Caucasus
    Soviet Republics and
    the Central Asia
    Republics make up the
    core of the New Eurasia
   Can the West formulate
    a new approach to the
    new Political and
    Economical Dynamics
    of the Eurasia
     Russia, East-Central Europe, and Central
      Asia: Overview and Economic History
   Early settlements—
    tribes in Caucasus area
    before 20,000
    B.C. Slavic tribes date
    to 2,000 B.C. in eastern
    Carpathians, spread west
    to Czech area, east to
    Russia, south to
    Greek realm united
    after 359 B.C. by Philip
    of Macedon, and his
    son Alexander
    conquered most of
    Persia, spreading Greek
    culture through an
    enormous empire.
The Roman Empire: 14 A.C. and 177 A.C.

   Romans
    empire and
    much of
    Empire divided
    East-West in
    285 A.C.
          Byzantine Empire in 814
   Byzantine
    after Rome
    fell in 476
    A.C. Eastern
    Greek liturgy.
    Led to schism
    in 1054.
        Bulgaria (632–1018): First Slav State in the 6th century A.D.

   The First
    Empire was a
    Bulgarian State
    founded in A.
    C. 632 in the
    lands near the
    Danube Delta
    in A. C. 1018
    after its
    annexation to
    the Byzantine
     Principalities of the Kievan Rus
   Kievan Rus: On
    trade route, Kiev
    became capital
    of Russian city-
    states during 9th
    century. Kievans
    but adoption of
    Orthodoxy in
    980 contributed
    to Eastern
          1054 The Great Schism
   The East-West
    Schism, or the
    Great Schism,
    divided medieval
    Christendom into
    Eastern (Greek)
    and Western
    (Latin) branches,
    which later
    became known
    as the Eastern
    Orthodox Church
    and the Roman
    Catholic Church
     The Spread of Islam: 622-750
   Mongol and
    Conquests in 13th-
    17th centuries
    devastated Central
    Eurasia, severed
    Western ties, and
    caused Russian
    capital to move to
    Moscow, which
    became the “Third
    Rome” after the fall
    bul in 1453. Czechs,
    Slovaks, Poles, and
    Slovenes avoided
    Ottoman domination;
    Hungary and Croatia
    were liberated early
    The Mongol Empire and Tamerlane: 1206–1405
   The Mongol Empire was
    an empire from the 13th
    and 14th century
    spanning from Eastern
    Europe across Asia. It is
    the largest contiguous
    empire in the history of
    the world. It emerged from
    the unification of Mongol
    and Turkic tribes in
    modern day Mongolia,
    and grew through
   Timur (1336–1405),
    commonly known as
    Tamerlane in the
    West,was a 14th century
    Turko-Mongol conqueror
    of much of western and
    Central Asia, and founder
    of the Timurid Empire and
    Timurid dynasty (1370–
    1405) in Central Asia,
    which survived until 1857
    as the Mughal Empire of
          The Ottoman Empire, Expansion and Apogee :
   The Ottoman Empire was an
    empire that lasted from 1299 to
    November 1922 (as an imperial
    monarchy) or July 24, 1923 (de
    jure, as a state) It was
    succeeded by the Republic of
    Turkey,which was officially
    proclaimed on October 29, 1923.
   At the height of its power (16th–
    17th century), it spanned three
    continents, controlling much of
    Southeastern Europe, the Middle
    East and North Africa. The
    Ottoman Empire contained 29
    provinces and numerous vassal
    states; some of which were later
    absorbed into the empire, while
    others gained various types of
    autonomy during the course of
    The empire was at the centre of
    interactions between the Eastern
    and Western worlds for six
    centuries. With Constantinople as
    its capital city, and vast control of
    lands around the eastern
    Mediterranean during the reign of
    Suleiman the Magnificent, the
    Ottoman Empire was, in many
    respects, an Islamic successor to
    the Eastern Roman (Byzantine
                                   Russian Empire
The Russian Empire: from 1721
 until the Russian Revolution of
 1917. It was the successor to
 the Tsardom of Russia
 (Russian state between Ivan
 IV’s assumption of the title of
 Tsar (Emperor) in 1547 and
 Peter the Great's foundation of
 the Russian Empire in 1721. ,
 and the predecessor of the
 Soviet Union. It was the
 second largest contiguous
 empire the world had seen,
 surpassed only by the Mongol
 Empire. At one point in 1866,
 it stretched from eastern
 Europe, across Asia, and into
 North America. At the
 beginning of the 19th century,
 Russia was the largest country
 in the world, extending from
 the Arctic Ocean to the north
 to the Black Sea on the south,
 from the Baltic Sea on the
 west to the Pacific Ocean on
 the east. Across this vast
 realm were scattered the
 Emperor's 176.4 million
 subjects, the third largest
 population of the world at the
 time, after Qing China and
 British India, but still
 represented a great disparity
 in economic, ethnic, and
 religious positions. Its
 government, ruled by the
 Emperor, was one of the last
 absolute monarchies left in
 Europe. Prior to the outbreak
 of World War I in August 1914
 Russia was one of the five
 major Great Powers of Europe.
      Russia: From Peter the Grate to Revolutionary
   Peter the Great and Russian Expansion (18th-19th Centuries)
     After Russian independence from Mongols in 1452, isolationism and feudal
     Early in 18th century, Peter the Great:
   1.     Introduced Western science, technology, art, and architecture.
   2.     Moved capital to St. Petersburg.
   3.     Avoided Western political and economic philosophies.
   4.     Levied heavy taxes and imposed forced labor.
   5.     Mounted territorial expansion and industrialization.
   Emancipation and Industrialization (1853-1900)
   Long maintenance of feudalism thwarted Russian development, led to defeat in
    Crimean War (fought during 1853-1856 against the British and French, who were
    protecting the Ottoman Empire from destruction by the Russians).
   Emancipation Decree of 1861 nominally abolished serfdom
   1.     Serfs freed from the arbitrary rule.
   2.     Land given to serfs, but:
   a.      Better land kept by gentry.
   b.     Serfs required to pay redemption payments and taxes.
   c.      Land held collectively by village communes, responsible for tax collection
    and apportionment. Handled by inefficient strip agriculture.
   3.     Tax and redemption payments forced agricultural sales and exports,
    monetized the economy, and supported railroad construction boom, which
    supported production of iron, steel, and petroleum
   Emancipation and industrialization caused little improvement in the living
    standards. Revolutionary movements began
     The Russian Revolutions and World War I (1900-1918)
   Russian Social Democrats, first congresses in 1903
    called for overthrow of monarchy and the adoption of
   Mensheviks—Russia not ready for socialism; party
    should be mass organization.
   V.I. Lenin Bolsheviks—Russia was ripe for socialism;
    membership restricted to elite revolutionaries.
   1905 Revolution—Bloody Sunday precipitated
    demonstrations and general strike in October. Tsar
    granted formation of Duma, and Stolypin reforms
    helped agricultural peasants.
   World War I arose from Balkan struggle for
   In Russia, WWI exacted horrible price, led to food
    riots, forcing Tsar to abdicate. Kerensky’s provisional
    government acted slowly, was overthrown by
    Bolsheviks with little fighting in November 1917.
   In Treaty of Versailles, 1919, regions of Habsburg
    empire ceded to Serbian, Czech, and Polish control
           First Russian Communism
             War Communism (1918-1921)
   New Bolshevik leaders faced problems.
   Promise of socialism.
   Consolidation of Bolshevik rule.
   Allied invasion after 1918 Brest-Litovsk Treaty
             Provisions of War Communism
   Confiscation of private and church land without compensation.
   Forcibly extracted "surpluses" from agricultural workers.
   Goods and food rationed, private trade outlawed.
   Most industrial enterprises nationalized and administered by
    commissariats headed by Vesenkha.
   "Labor armies" rebuilt roads and railways, and worked in mines.
    Production plummeted, arising from poor work incentives,
    concealment of surpluses, and chaotic management, but also from
    wartime disruption.
    New Economic Policy
 The New Economic Policy (1921-1928)
Design—a temporary experiment in market
 1.     Progressive agricultural tax.
 2.     Private trade was legalized.
 3.     Small enterprises leased to
  entre-preneurs and larger enterprises operated
  as public trusts. Only "the commanding
  heights of in-dustry" were kept under direct
  governmental control.
 4.     Freer labor mobility, market-determined
  wages, and pro-labor legislation.
Performance—After 1921, NEP supported rapid
  recovery, but with rising inequality.
        The Industrialization Debate

The Industrialization Debate
  Stimulated by the Scissors Crisis and Lenin's death in 1924.
Bukharin and "right-deviation" faction
 Continuation of the market-oriented policies of NEP, following
   comparative advantage in agriculture.
  Maintain smychka, or alliance, between agricultural and industrial
  Agricultural investments in the short run would most effectively
   support industrial development in the long run.
Trotsky, Preobrazhensky, and “left-deviation" faction
  NEP will lead to return of capitalism
  USSR, surrounded by enemies, needs heavy industry.
  Industrialization accelerated by exploitation of the private sector
   and agriculture.
Worldwide socialist revolution versus socialism in one country
Planning debate—Geneticists versus teleologists.
           The Planning Era
The Planning Era Begins (1929-1945)
 After vacillation, Stalin adopted a leftist and
  teleological strategy. The First Five-Year Plan
  called for rapid rates growth of all sectors, but
  highest for producer goods and lowest for
  agriculture. Fulfillment of the plan was even more
 Falling agricultural production caused by low plan
  priority and violent collectivization.
  Industrialization strengthened the nation’s
  military stance, but eventually turned a major
  grain exporter into an importer.
      After World War II (1945-1953)
After World War II (1945-1953)
   From “capitalist encirclement,” and Soviet autarky, to the
    “socialist commonwealth.”
   Adoption of Soviet-style systems throughout region (Iron
   Creation of Council for Mutual Economic Assistance to
    answer the Marshall Plan. Redirection of trade.
   East German, Romanian, and Hungarian reparations to USSR.
Tito's Yugoslavia
   Impact of WWII.
   Tito’s hero status.
   Initial acceptance of Soviet political/economic system.
   Conflicts with Stalin, 1948 expulsion from Comintern.
   Reversal in 1950—acceptance of Western aid and adoption of
    labor self-management.
        After Stalin (1953-1960)

After Stalin (1953-1960)
 1953 Stalin's death in 1953

 1956 Khrushchev's denunciation of Stalin's
 Albanian schism
 Hungarian revolt crushed by Soviet troops

 Upgrading of CMEA
 1962         Basic Principles of the International
  Socialist Division of Labor called for specialization
  and integration of production.
 Khrushchev’s abortive attempt to introduce
  supranational planning.
    Early Reforms (1960-1970)
Early Reforms (1960-1970)
 A.      Soviet system inappropriate for small, trade-
  dependent countries. Hungary and Poland
  initiated reforms.
 B.      Deterioration of Soviet growth. Kosygin reforms of
 C.      Watershed in 1968— Prague Spring and Hungarian
  New Economic Mechanism.
XIII. Prelude to the Fall (1970-1985)
 1970 Food price hikes in Poland lead to strikes, repression,
  and resignation of Gomulka.
 1972 Nixon visits Moscow, launches détente.
 1976 Polish indebtedness culminates again in price hikes,
  strikes, repression.
 1978 Selection of Polish pope.
 1980 Birth of Solidarity trade union in Poland.
 1981 Polish martial law.
The Dissolution of Soviet Empire
The End and the New Beginning (1985-1991)
 1985 Mikhail Gorbachev takes office in the Soviet
  Union, introduces glasnost (openness) and
  perestroika (restructuring), and repudiates
  Brezhnev Doctrine.
 1989 Mass demonstrations, destruction of Berlin
  Wall, removal of Communist leaders throughout
  the region.
 1990 Balcerowicz “shock therapy” in Poland.

 1991 Abortive coup against Gorbachev causes
  Russian President Yeltsin to suspend Communist
  Party activities and Gorbachev to dissolve USSR.
 1999 Vladimir Putin the New Zar of Russia
 2008 Dmitrij Medvedev become Republic
  President of Russia. Putin Prime Minister
    PART 2: Overview on the energy policy in
   Is there a pipelines war in Eurasia? Recent events like the
    conflict with Ukraine for the gas pipeline and the war
    against Georgia (where Russia is military presents in
    Abkhazia and South Ossetia) show it. Russia from one end,
    USA from the other tries to control the Eurasian Strategic
    Corridor. Iran, China and India are going to play a decisive
   The geopolitic balance of the region is based, not (not
    only) on religious or ethnic divisions, but on the energy
    policy: oil and gas fields and wells, pipelines networks and
    commercialization of raw materials
   One of the most important problems of the Russian
    distribution gas network is the original, centralized
    structure, following the Soviet Union philosophy. Instead,
    90% of the Russian gas flow (Western Europe direction)
    goes trough Ukraine
   The Central and Eastern Europe Nations like Germany,
    Austria, Italy, Baltic Countries, Czech Republic, Bulgaria,
    Slovakia, Poland, Serbia, Slovenia, Hungary needs to find
    alternative routes to gas supplies
Geopolitical Pipelines
      Gas Exporting Countries Forum (GECF)
    The Gas Exporting Countries Forum (GECF) is an organization of
    some of the world's leading gas producers. The members are
    Algeria, Bolivia, Brunei, Egypt, Equatorial Guinea, Indonesia,
    Iran, Libya, Malaysia, Nigeria, Qatar, Russia, Trinidad and
    Tobago, the United Arab Emirates and Venezuela. Kazakhstan
    and Norway are observers
   The GECF was established in Tehran in 2001. Until the seventh
    ministerial meeting in Moscow, it operated without charter and
    fixed membership structure. The seventh ministerial meeting,
    held on 23 December 2008 in Moscow, adapted the
    organization's charter
   The objectives of the GECF are: to foster the concept of mutuality
    of interests by favouring dialogue between producers, between
    producers and consumers and between governments and
    energy-related industries; to provide a platform to promote
    study and exchange of views; to promote a stable and
    transparent energy market
   GECF does not have headquarters yet; Qatar's national oil
    company Qatar Petroleum serves as a GECF Liaison Office.
    Although Russia's Prime Minister Vladimir Putin offered to give
    GECF full diplomatic status in a location in St. Petersburg, it was
    decided on 23 December 2008 to set up an Executive Office and
    a Secretariat in Doha, Qatar. The Secretary General will be
    elected on the eight ministerial meeting
1        Arabia Saudita        264.300                        21,9
2        Iran                  137.500                        11,4
3        Iraq                  115.000                        9,5
4        Kuwait                101.500                        8,4
5        Emirati Arabi Uniti   97.800                         8,1
6        Venezuela             80.000                         6,6
7        Russia                79.500                         6,6
8        Libia                 41.500                         3,5

9        Kazakhstan            39.800                         3,3
10       Nigeria               36.200                         3,0
11       USA                   29.900                         2,5
12       Canada                17.100                         1,4
13       Cina                  16.300                         1,3
14       Qatar                 15.200                         1,2
15       Messico               12.900                         1,1
16       Algeria               12.300                         1,0
17       Brasile               12.200                         1,0
18       Angola                 9.000                         0,7
19       Norvegia               8.500                         0,7
20       Azerbaijan             7.000                         0,6
21       Resto del Mondo       74.700                         6,2
Tot.                           1.208.200                      100%
1        Russia                607,67                         48.000

2        Stati Uniti           526,51                          5.353

3        Canada                178,35                          1.603

4        United Kingdom        103,75                           905

5        Algeria                95,12                          4.545

6        Norvegia               84,96                          3.188

7        Iraq                   83,20                          3.080

8        Indonesia              82,76                          2.557

9        Iran                   81,99                         26.500

10       Nederlands             74,20                          1.492

11       Arabia Saudita         63,99                          6.654

12       Uzbekistan             58,01                          1.860

13       Turkmenistan           57,31                          2.900

14       Malesia                52,69                          2.464

15       Cina                   51,19                          1.823

16       Emirati Arabi Uniti    45,22                          6.654

17       Qatar                  40,39                         25.783

18       Australia              40,07                          2.548

19       Egitto                 30,81                          1.756

20       Venezuela              29.39                          4.223

21       Kazakistan             21,87                          1.900

22       Nigeria                20,81                          5.055
                  Dependence Upon Russian Natural Gas
                     by Selected European Countries
Natural Gas Imports from RussiaQuantity (billion cu. ft./yr)            % of Domestic Consumption
   Germany                       1,290                                             39%
   Italy                           855                                             31%
   Turkey                          506                                             65%
   France                          406                                             24%
   Austria                        212                                              69%
   Poland                          212                                             43%
   Netherlands                      94                                              6%
   Greece                           78                                             82%
   Sweden                           39                                    Zero or less than 0.5%
   Belgium                           7                                               1%
   Denmark                  Zero or less than 500 million cubic feet      Zero or less than 0.5%
   Ireland                  Zero or less than 500 million cubic feet      Zero or less than 0.5%
   Portugal                Zero or less than 500 million cubic feet       Zero or less than 0.5%
   Spain                    Zero or less than 500 million cubic feet      Zero or less than 0.5%
   United Kingdom          Zero or less than 500 million cubic feet       Zero or less than 0.5%
                    Dependence Upon Russian Natural Gas
            by Selected Former Soviet and Soviet Satellite Countries
   Ukraine                    850                      35%
   Belarus                    698                     99%
   Hungary                    318                      64%
   Czech Republic             253                      77%
   Slovakia                    226                     99%
   Poland                     212                      43%
   Finland                    163                      98%
   Romania                    138                      22%
   Lithuania                   103                    100%
   Bulgaria                     99                      99%
   Moldova                      77                    100%
   Latvia                       62                    100%
   Georgia                      39                    100%
   Estonia                      34                    100%
   Slovenia                     20                      52%

   Japan                                                85%
    Oilpipelines and Gaspipelines in Russia, European Union and
    Naftohaz Ukrainy: Ukraine
     Pipeline. According to the
     contract on 21 June 2002,
     signed between Gazprom
     and Naftohaz, the payment
     for the transfer of Russian
     natural gas through
     Ukrainian pipeline system
     had been made in the form
     of barter exchange – up to
     15% of gas pumped through
     the Ukrainian territory was
     taken by Ukraine instead of
     payments in cash. This
     contract was supposed to be
     valid until the end of 2013
    Betransgaz: On May 18,
     2007, in Minsk, Russia’s
     Gazprom and the Belarus
     government’s State Property
     Committee signed
     agreements to turn the
     Belarus state-owned gas
     pipeline company
     Beltransgaz into a Russia-
     Belarus joint company.
     Betransgaz handles both the
     transit of Russian gas to
     European Union countries
     and the internal distribution
     of Russian gas in Belarus.
Gas Pipelines
Routes of the pipelines from Russia to Europe
            Alternative Routes to Ukraine
   Yamal-Europe pipelineThe planning of the Yamal-Europe pipeline started in 1992.
    Intergovernmental agreements between Russia, Belarus and Poland were signed in 1993. In
    1994, Wingas, the joint venture of Gazprom and Wintershall, a subsidiary of BASF, started
    building the German section of the pipeline. The first gas was delivered to Germany through
    the Belarus-Polish corridor in 1997. The Belarusian and Polish sections were completed in
    September 1999 and the pipeline reached its rated annual capacity of about 33 billion cubic
    meters of natural gas in 2005, after completion of all compressor stations.
    Blue Stream (IGIT Pipeline) is a major trans-Black Sea gas pipeline that carries natural gas
    from Russia into Turkey. The pipeline has been constructed by the Blue Stream Pipeline B.V.,
    the Netherlands based joint venture of Russian Gazprom and Italian Eni. The Blue Stream
    Pipeline B.V. is an owner of the subsea section of pipeline, including Beregovaya compressor
    station, while Gazprom owns and operates the Russian land section of the pipeline and the
    Turkish land section is owned and operated by the Turkish energy company BOTAŞ. According
    to Gazprom the pipeline was built with the intent of diversifying Russian gas delivery routes to
    Turkey and avoiding third countries.

   Betransgaz On May 18, 2007, in Minsk, Russia’s Gazprom and the Belarus government’s
    State Property Committee signed agreements to turn the Belarus state-owned gas pipeline
    company Beltransgaz into a Russia-Belarus joint company. Betransgaz handles both the transit
    of Russian gas to European Union countries and the internal distribution of Russian gas in
   Nabucco pipeline is a planned natural gas pipeline that will transport natural gas from Turkey
    to Austria, via Bulgaria, Romania, and Hungary. It will run from Erzurum in Turkey to
    Baumgarten an der March, a major natural gas hub in Austria. This pipeline is a diversion from
    the current methods of importing natural gas solely from Russia. The project is backed by
    several European Union states and the United States.

   Nord Stream North Transgas and North European Gas Pipeline; also known as the Russo–
    German gas pipeline or the Baltic Sea gas pipeline) is a planned natural gas pipeline from
    Russia to Germany by the company Nord Stream AG
Alternative Routes To Ukraine
Nabucco Pipeline Project In Detail
Baltic Pipeline Project In Detail
 Geopolitical Pipelines – Alternative Routes out of
                 Russian Control
           GUAM-NATO Alliance
Pipeline Odessa-Brody-Plotsk (OBP) from Ukraine
  to Polonia
Pipeline Bakou Tbilisi Ceyhan (BTC) from Caspian
  Sea to Mediterranean and Turkey
Project of Submarine Pipeline Trans-Israël-Eilat-
  Ashkelon (TIEA) from Caspian Sea to Israel
Project TRACECA, Silk Road Stategy (SRS), a
  multichannel Corridor Europe, Caucasus, Asia
Kazakhstan-Chine Pipeline (KCP), a gas pipeline
  from Kazakhstan to Autonomous Region of
The Odessa-Brody-Plotsk (OBP) Pipeline
The Baku Tblisi Ceyan (BTC) Pipeline
       Project of Submarine Pipeline Trans-Israël-Eilat-
         Ashkelon (TIEA) from Caspian Sea to Israel
   Israel is now part of the Anglo-
    American military axis, which serves
    the interests of the Western oil giants
    in the Middle East and Central Asia.
    Not surprisingly, Israel has military
    cooperation agreements with Georgia
    and Azerbaijan
   an underwater Israeli-Turkish
    pipeline project has been envisaged
    which would link Ceyhan to the Israeli
    port of Ashkelon and from there
    through Israel's main pipeline system,
    to the Red Sea
   The objective of Israel is not only to
    acquire Caspian sea oil for its own
    consumption needs but also to play a
    key role in re-exporting Caspian sea
    oil back to the Asian markets through
    the Red Sea port of Eilat. The
    strategic implications of this re-
    routing of Caspian sea oil are far
Kazakhstan-Chine Pipeline (KCP)
    LNG (Liquefied Natural Gas) - Russia’s New Energy Blackmail
               Tool, a Russia’s New Energy Weapon

   Putin was the
    architect of Russia’s
    use of energy as a
    foreign policy tool.
    He is now
    threatening to use
    Liquefied Natural
    Gas (LNG) as
    Russia’s new energy
    weapon. In essence,
    this will be utilized
    as a means of
    coercing the EU in
    order to achieve de
    facto recognition of a
    Russian “sphere of
    influence” within the
    former Soviet Union.
    Part 3: Russia-Ukraine, The Pipeline War
                                      Case Study
   One of the most important problems of the Russian distribution gas network is the original,
    centralized structure, following the Soviet Union philosophy. Instead, 90% of the Russian gas flow
    (Western Europe direction) goes trough Ukraine
   December 2005, The disputes came to a head for the first time in 2005, when the Russian
    government-controlled gas supplier Gazprom and Ukrainian national gas company Naftohaz Ukrainy
    failed to reach an agreement on gas prices (Political Price for Ex Sovietic Republic 50 $ -1000 cubic
    metre; Market Price 240$)
    On January 1, 2006, Russia cut off its gas supply to Ukraine. The flow was restored just three days
    later when an agreement was reached (95 $ for 1000 cubic metre, but the relationship between the
    two countries remained tense about Krimea (Russian Navy) and during the Georgia’s War
   The latest dispute began when Gazprom officials made statements on Russian television saying
    Ukraine had neither paid its gas debt owed to Russia, nor signed a gas supply contract for 2009.
    During December 2008 Ukrainian President Victor Yushchenko and Russian President Dmitry
    Medvedev traded barbs over the claims. Yushchenko denied reports Ukraine was in debt of close to
    $1.6 billion, indicating that the figure was much less, while President Medvedev warned that Russia
    would use its "entire arsenal of possibilities" if Ukraine did not pay its full debt
   Unable to resolve the dispute, Russia cut off its gas supply to Ukraine on New Year's Day 2009
   On Jan. 7, one week after the initial cut-off, the pipelines to Europe stopped flowing
   Finally, on Jan. 20, Russia's gas supply to Europe was restored after an agreement was reached by
    Russian Prime Minister Vladimir Putin and Ukranian Prime Minister Yulia Tymoshenko. The new
    agreement stated that Ukraine would not raise the fee for Russian gas transit, and Ukraine would
    receive a 20 percent discount on the basic price for gas
   Russia is currently experiencing a recession in most sectors of the economy, and Ukraine, which has
    fewer natural resources, had a 20 percent decline in national production in late 2008. The damages
    incurred on each side during the latest gas dispute are undoubtedly major blows to both wounded
   The European Commission and Ukraine (March, 2009) signed a joint declaration on the
    modernization of Ukraine's gas pipeline network. The Commission estimated the cost of the
    necessary improvements at 2.5 billion euros ($3.4 billion), Russia is ready to participate in and
    partially finance the modernization of Ukraine's natural gas pipeline system but underiline that The
    modernization of Ukraine's gas transportation system could cost $16 billion, not the some $3 billion
    suggested by European Commission experts

   Ukraine is bordered by Russia to the east; Belarus to the north; Poland, Slovakia,
    and Hungary to the west; Romania and Moldova to the southwest; and the Black
    Sea and Sea Azov to the south. The city of Kiev (Kyiv) is both the capital and the
    largest city of Ukraine
   Ukraine is subdivided into twenty-four oblasts (provinces) and one autonomous
    republic, Crimea. Additionally, the cities of Kiev, the capital, and Sevastopol, both
    have a special legal status. The 24 oblasts and Crimea are subdivided into 490
    raions (districts), or second-level administrative units. The average area of a
    Ukrainian raion is 1,200 square kilometres (460 sq mi); the average population of a
    raion is 52,000 people.
     Major Ukrainian Parties and Blocs
   The Party of Regions was created in March 2001. The party ideologically
    defends and upholds the rights of ethnic Russians and speakers of the
    Russian language in Ukraine. It originally supported president Leonid
    Kuchma and joined the pro-government United Ukraine alliance during the
    parliamentary elections on 30 March 2002. The party's leader is former
    Ukrainian Prime Minister Viktor Yanukovych. The areas the Party of
    Regions does well in are mostly parts of historic Novorossiya. Its electoral
    and financial base is located primarily in the east and south-east of
    Ukraine, where it enjoys wide popular support. In the Eastern Ukrainian
    Donetsk Oblast the party claims to have over 700,000 members.
   Bloc Yuliya Tymoshenko is the name of the bloc of political parties in
    Ukraine led by Yulia Tymoshenko Although the party attracts most of its
    voters from Western Ukrainian, Ukrainian speaking provinces (Oblasts) it
    has in recent years recruited several politicians from Russian speaking
    provinces like Crimea (Lyudmyla Denisova) and Luhansk Oblast (Natalia
   Our Ukraine–People's Self-Defense Bloc is an electoral alliance active in
    Ukraine, associated with President Viktor Yushchenko. Since 2005, the
    bloc has been dominated by a core consisting of the People's Union
    "OurUkraine" party and five smaller partner parties. The Our Ukraine Bloc
    is most closely associated with the Orange Revolution and continues to
    use orange as its political colour. In July 2007, the old Our Ukraine bloc
    had been reorganized into the Our Ukraine–People's Self-Defense Bloc for
    the 2007 parliamentary election in September 2007. The member parties
    had planned to merge into a single party in December 2007 but on
    November 16, 2007 People’s Self-Defense decided to end its participation
    in the process of forming a united party since then that process is unclear.
    The alliance currently holds 72 out of 450 parliamentary seats.
              Oil and gas companies of Ukraine

   Naftohaz Ukrainy is the state company of Ukraine concerned with extraction,
    transportation, and refinement of natural gas and crude oil. The company is also
    active in Egypt and in the United Arab Emirates

   JSC Nadra Group, specialising in oil and gas exploration and production, and water
    purification equipment

    JSC Nikopol Pipeline Fitting Plant, manufacturer of pressure gates and check
    valves for petrochemical and water/steam applications, located in the
    Dnipopetrovsk region

   JSC Sumy Frunze NPO, Manufacturer of Equipment for the Oil, Gas, and Chemical
    Industries, located in Sumy, Ukraine

   The Deane Group, provides consultancy and business services to companies
    operating within the oil and gas industry in Ukraine and to foreign or Ukrainian
    companies wishing to establish new oil/gas-related businesses in Ukraine. The
    Company has particular expertise and experience in Ukraine's oil and gas sector
    and offers advice and services in areas such as oil/gas business strategy
    development, investment project development, business and political analysis,
    government and external relations, and corporate representation. Through its
    network of Associates, the Company can provide expert and informed comment and
    advice on all areas of Ukraine's fuel and energy complex
    Ukrainian Petroleum and Energy Consultants, leading information resource in the
    oil and gas sector of Ukraine
   Russia is a semi-presidential republic comprising 83 federal
    subjects. Russia shares land borders with the following countries:
    Norway, Finland, Estonia, Latvia, Lithuania (via Kaliningrad
    Oblast), Poland (via Kaliningrad Oblast), Belarus, Ukraine,
    Georgia, Azerbaijan, Kazakhstan, China, Mongolia and the
    Democratic People's Republic of Korea. At 17,075,400 square
    kilometres (6,592,800 sq mi), Russia is by far the largest country
    in the world, covering more than an eighth of the Earth’s land
    area; with 142 million people, it is the ninth largest by population
   Russia is a federation and formally a semi-presidential republic,
    where in the President is the head of state and the Prime Minister
    is the head of government. The Russian Federation is
    fundamentally structured as a representative democracy.
    Executive power is exercised by the government.[90] Legislative
    power is vested in the two chambers of the Federal Assembly. The
    government is regulated by a system of checks and balances
    defined by the Constitution of the Russian Federation, which
    serves as the country's supreme legal document and as a social
    contract for the people of the Russian Federation
                   Major Russian Parties
   United Russia the major political party in the Russian Federation. United Russia
    supports President Dmitry Medvedev, and is currently the largest political party in
    the Russian Federation. On April 15, 2008, Vladimir Putin (Prime Minister)
    accepted the nomination to become chairman of the party
   Communist Party of the Russian Federation is a Russian political party under
    the leadership of Gennady Zyuganov. It is sometimes seen as a successor to the
    Communist Party of the Soviet Union (CPSU) and the Bolshevik Party
   Liberal Democratic Party of Russia has been led by Vladimir Zhirinovsky
    almost since its founding, in 1989, as the Liberal Democratic Party of the Soviet
    Union. The LDPR describes itself as a centrist, pro-reform democratic party. The
    programme of the party calls for democracy and social liberalism. Despite the
    name, a widespread opinion in the West is that the party's ideology is not liberal
    and it is often regarded, especially in external media, as an ultranationalist party.
    The LDPR states that its main political opponents are Yabloko and the Communist
    Party of the Russian Federation (CPRF). It describes itself as an opposition party
    however its deputies hardly ever voted against the Putin government
   Fair Russia formed on 28 October 2006 as a merger of Rodina, the Russian Party
    of Life and the Russian Pensioners' Party. First party chairman Sergey Mironov,
    the chairman of the Federation
     Oil and gas companies of Russia
   Gazprom, is the world's biggest gas exploration and
    production company
   Gazflot, russian exploration and ship owning company
   JSC Gazprom Neft, is one of the largest oil and gas
    producing companies in Russia
    Lukoil, is Russia's leading oil company
   Rosneft, russian oil and gas exploration company
    (bought Yukos)
   Sevmorneftegaz, CJSC, Development of oil and gas
    fields on Russia’s Arctic continental shelf
   Sibneft, petroleum exploration, production, refining,
    and marketing
      Russia–Ukraine recent relations
   Ukraine's recent attempts to joint the EU and NATO was seen as change of course to only a
    pro-Western, anti-Russian orientiation of Ukraine and thus a sign of hostility and this resulted
    in a drop of Ukraine's perception in Russia
   The status of the Russian Black Sea Fleet in Sevastopol remains a matter of disagreement
    and tensions. During the 2008 South Ossetia war relations with Russia also deteriorated over
    the new rules for the Russian Black Sea Fleet to obtain permission when crossing the
    Ukrainian border, which Russia refused to comply with.
   In February 2008 Russia unilaterally withdrew from the Ukrainian-Russian
    intergovernmental agreement on SPRN signed in 1997. The SRPN-2 Prognoz programme,
    commonly known as just Prognoz, is a Russian, previously Soviet, missile defence early
    warning programme
    During the 2008 South Ossetia war, relations between Ukraine and Russia deteriored,
    due to Ukraine's support of Georgia's territorial integrity and selling of arms to Georgia.
    Further disagreements over position on Georgia and relations with Russia were among the
    issues (Domestic Crises) that brought down the Our Ukraine-Peoples Self Defence + Bloc
    Yulia Tymoshenko coalition in the Ukrainian parliament during September 2008 (on
    December 16, 2008 the coalition did remerge with a new coalition partner, the Lytvyn Bloc
   Russia is heavily opposed to Ukraine and Georgia becoming members of NATO. NATO
    Summit (April, 2008) denied the Membership to Ukraine and Georgia. Russia, naturally,
    approved this decision

   January 2009, dispute about natural gas prices. The war of pipelines. Relations further
   Domestic and Foreign Actors: United States; Western Europe Bloc; Central
    Europe Bloc; Baltic; Eastern Europe Bloc; Caucasus Countries; Middle East
    Countries (Israel); North of Africa; Nigeria and Central Africa Oil and Gas
    Producers; Central Asia Countries; India; China.
   International Organizations: European Union; NATO; GUAM (Organization for
    Democracy and Economic Development); GECF (Gas Exporting Countries Forum);
    SCO (Shanghai Cooperation Organization); CSTO (Collective Security Treaty
    Organization); Eurasian Economic Community (EurAsEC); ASEAN; ASEAN
   National Actors (Crises Russia-Ukraine, Major Political Parties): United Russia
    (Vladimir Putin, Dimitry Medvedev); Communist Party of the Russian Federation
    (Gennady Zyuganov); Liberal Democratic Party of Russia (Vladimir Zhirinovsky);
    Fair Russia (Sergey Mironov); The Party of Regions (Viktor Yanukovych); The
    Yulia Tymoshenko Bloc (Yulia Tymoshenko); The Our Ukraine–People's Self-
    Defense Bloc (Viktor Yushchenko)
   Gas Economic Actors: Gazprom (Russia); Rosneft (Russia); Naftohaz Ukrainy;
    Beltransgaz (Belarus); Exxon Mobil (United States); British Petroleum (Great
    Britain); Total Fina Elf (France); Royal Dutch Petroleum (Nederlands);
    ChevronTexaco (United States); Eni (Italy); Shell Transport and Trading (Great
    Britain); Basf (Germany); Wintershall (Germany); QatarGas (Qatar Petroleum);
    National Iranian Oil Company (NIOC); Gassco (Norway); StatoilHydro (Norway);
    DONG Energy (Denmark); China National Petroleum Corporation (CNPC)

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