Will the third gas conflict erupt today?
Consequently, the tripartite gas discussions held on the evening of June 16 between envoys from Ukraine, Russia, and the European Commission once more concluded without resolution – the Russian contingent departed from the meeting in Kyiv.
The matter of transitioning Naftogaz to advance payment is still relevant, according to Gazprom representative Sergey Kupriyanov. “The Russian party anticipates settlement of the accrued gas debt amounting to $1.951 billion by 10:00 a.m. Moscow time on June 16. Should funds not be received, gas deliveries to Ukraine will be switched to a prepayment system, as previously indicated,” he cautioned.
Therefore, Moscow did not concede to Kyiv’s latest proposition of $326 per thousand cubic meters for Russian gas (the Ukrainian government had previously mentioned a figure of $268.5), continuing to insist on its established price of $380 per thousand cubic meters.
Simultaneously, the chief of the Ukrainian Energy Ministry, Yuriy Prodan, mentioned that Moscow showed no willingness to discover a market-based agreement on gas, further noting that Kyiv was poised to reduce gas consumption.
“With each stage of discussions, we noted that the Russian side demonstrated hardly any desire to reach a market-oriented agreement. The Russian contingent was intent on heightening the dispute and declined all compromise, very specific proposals articulated by the European Commission,” Prodan emphasized.
He also conveyed that Ukraine is ready for limitations on Russian provisions. “Presently, there exist in excess of 13.5 billion cubic meters of gas in storage. The Ukrainian side is presently ready for such an occurrence. We have undertaken considerable effort to enhance reverse flows from Europe, and I anticipate that, in conjunction with the European Commission, we shall pursue methods to amplify reverse flows from European nations,” Prodan stated.
Later yesterday evening, the director of the National Joint Stock Company “Naftogaz of Ukraine” Andriy Kobolev similarly declared that Ukraine and Russia failed to achieve a consensus following the latest round of deliberations in Kyiv.
“This consensus was not ratified by the Russian side today. I consider that there persists an opportunity to ratify this consensus tomorrow prior to 9:00 a.m. Kyiv time, when the new gas day commences,” he remarked.
Furthermore, the director of Naftogaz of Ukraine validated the company’s eagerness to commence proceedings in the Stockholm Arbitration Court.
Consequently, a miracle is improbable to transpire in the impending hours. Moscow seems to have resolved to gamble everything, and today at 9:00 a.m. Kyiv time, the Third Gas War will commence—Russia will curtail gas deliveries at the Ukrainian-Russian boundary, excluding gas destined for Ukraine and, at present, retaining solely gas for Europe (which traverses through the Ukrainian pipeline to European countries).
Slightly subsequently—perhaps in July—we might anticipate Moscow to wholly cease the gas pipeline at the Ukrainian-Russian boundary. Russia will either resort to the customary accusation of stealing Russian gas from volumes intended for Europe, or to illicitly—from the Kremlin’s viewpoint—reverse gas provisions from European countries to Ukraine.
Permit me to remind you that the First Gas War, involving a temporary gas suspension to Ukraine, materialized in January 2006. The Second—with gas suspensions initially solely to Ukraine, and then entirely—in January 2009.
Economics from the Prophet
