Where east meets west: European gas and ukrainian reality

Washington Quarterly

Volumn 32, Issue 1, 2009, Pages 77-92

  Chow, Edward ^a   Elkind, Jonathan ^b  

^a National Security Programs   (United States)

^b BROOKINGS INSTITUTION   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 75849118632     PISSN: 0163660X     EISSN: 15309177     Source Type: Journal    
DOI: 10.1080/01636600802552247     Document Type: Article

References (7)

1. Press Office of President Viktor Yushchenko, "Joint Address to NATO Secretary General", January 11, 2008, http://www.president.gov.ua/en/news/8645.html.
2. Bucharest Summit Declaration, April 3, 2008, http://www.nato.int/docu/pr/2008/p08-049e.html.
3. Gas consumption figures drawn from the BP StatisticalReview of World Energy 2008, available at http://www.bp.com/productlanding.do?categoryId=6929&contentId=7044622. GDP figures are purchasing power parity estimates, drawn from CIA's World Factbook, available at https://www.cia.gov/library/publications/the-world-factbook/index.html.
4. To compare (in a rough manner) the price of gas delivered to a given European country X and the price of gas delivered to Ukraine, one needs to subtract from the gas price in country X the price of transit from Ukraine's eastern border to country X. For example in January 2007 Russian gas delivered to France cost on the order of $295 per thousand cubic meters. If one deducts gas costs of transit between Russia and France, the comparable price in Ukraine would have been roughly $230. This is only an indicative comparison and should not be interpreted as implying that there is a standard or an "accepted" gas price in Europe. Gas prices under a given contract reflect the full range of factors from competitive gas supply to quantity of demand, and from available alternative fuels to skill of the commercial negotiators.
5. Since Ukrainian regulators never based their rate-making calculations on the actual price of gas (rather, they used the nominal price for their calculations) Ukrainian customers never paid the actualrepl acement cost of the gas they consumed. This fact allowed debt to pile up, which then provided the basis for more non-transparent deals.
6. "Ukraine president suspends cabinet's decision to controltop state companies," BBC Monitoring KievUnit, May 20, 2008.
7. Alexander Bor, "Ukraine Orders $1.7 billion Naftogaz Bailout," Platts Oilgram News 86, no. 198 (October 7, 2008): 7.