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Andy Tully

Andy Tully

Andy Tully is a veteran news reporter who is now the news editor for Oilprice.com

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Ukraine Considers Restricting Russian Gas Deliveries To Europe

Ukraine is planning to impose sanctions on Russia that might include an effort to starve its larger and richer neighbor of income by stopping the flow of Russian gas through Ukraine to customers in Western Europe.

Ukrainian Prime Minister Arseniy Yatsenyuk told reporters on Aug. 8 that his government is proposing sanctions against 172 citizens from Russia and other countries, as well as 65 Russian companies “for financing terrorism” by supporting the efforts of Russian separatists in eastern Ukraine.

Other options being considered include closing Ukrainian air space to Russian aircraft, reducing cooperation between the countries’ defense industries, and restrictions on Russian ships in Ukrainian waters. And he mentioned a “partial or full ban on the transit” of resources from Russia through Ukraine.

Asked if that could include Russian gas shipped to Western Europe via Ukrainian pipelines, the prime minister replied, “I spoke about all the measures which could be included in the [proposed] law. This includes the possible halting of all types of transit, from air flights to transit of resources.”

These proposals bring Ukraine into a growing tit-for-tat sanctions war being fought for the past several months by the European Union, the United States and Russia over the Ukraine crisis. Two rounds of EU and U.S. sanctions have limited travel for several influential Russians and denied Russian oil companies access to Western capital and technology.

Russia has responded by banning produce from Poland, an EU member, and said it is considering bans of other foods from the West, citing food safety. Russia is the EU’s biggest customer of fruit and vegetables, buying more than 2 billion euros worth of produce from the bloc each year. It has previously been accused of such bans from countries with which it has had political disputes.

Yatsenyuk said he expects more of the same from Moscow. “There’s no doubt that Russia will continue its course – started a decade ago – aimed at banning imports of Ukrainian goods, limiting cooperation with Ukraine, pressure and blackmail.”

And the costs, he acknowledges, could be high for Ukraine. “In the most negative scenario for Ukraine, losses during the first year may reach $7 billion, not only because of sanctions but also because of the Kremlin’s aggressive policy.”

But a complete shutoff of oil and gas flowing through Ukraine also could hurt Russia. In 2013, Moscow reports, Russia used Ukrainian pipelines to transport 86.1 billion cubic meters of its gas and 15.6 million metric tons of oil. That includes about half of Russia’s annual exports of gas, though less than 7 percent of its oil exports.

Also at risk, of course, is Western Europe, which receives about 30 percent of its gas from Russia, half of it piped through Ukraine. Twice, in 2006 and 2009, that flow has been interrupted. Gas flows to Europe through Ukraine are intact today despite the fighting in Ukraine, but a shutoff of the pipelines to punish Russia would hurt Ukraine’s Western supporters, as well.

By Andy Tully of Oilprice.com

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  • Herve D on August 12 2014 said:
    EU is now fully guilty for not having sent observers (official and non official) in Danbass to see what occurs there. After 5 months of conflict they had enough time to check whether milicia is backed by population (thence legitimated) of just separatists hated by population.
    Same thing about the usage of heavy weaponry by Kiev troops officially handling a simple "police operation".
    If it is true that these weapons kill many civilians, so we have there a great new kind of horror: Even Hitler during 1934 "Crystal Night" did'nt use heavy weapons against his own population.....The previously worst horror to date was 1956 Soviet military intervention in Budapest, still against another country.
  • Arkady on August 12 2014 said:
    West backs Kiev! Look, Joe Biden asked Viktor Yanukovich not to use weapon agains protesters on Maidan. He did not! (Look, where is he now?!). And now West proclaims it is the right of the Kiev to use
    heavy military agains civil population!
    OK, the West must
    be prepared for the Kiev's triks like total stop of the gas flow from Russia to Europe! Kiev and Brussel are friends now. Friend should forgive the friend!
    For sure, European countries must apply to U.S. for the gas (U.S. has a lot of shale gas and they are eager to send it not to Asia but to European consumers!). For sure European peasants should apply to Washington as well, for money! It was Washington pressing Brussel to accept the sanctions against Russia... And now Russia imposed its own sanctions!
    Europe suffers much more then U.S. Such the way americans are: they love to be heroes at the expence of others!
  • Andrey Palyura on August 13 2014 said:
    After Ukrainian PM announced that they consider to stop Russian gas flow to EU, it does not matter they do or not - South-stream should be built. Ukraine would always blackmail EU by stopping of gas transit.
  • Arkady on August 13 2014 said:
    Brussel acts to satisfy Washington! Look, they still does not let to use Opal for 100%. They do all they best to make the bad for Europeans just to satisfy Washington! For sure, Brussel is ready to stop South Stream as well just to be the good boys for American bosses!
  • Andrey Palyura on August 14 2014 said:
    You are right Herve, it is not police operation, it is a war. Official death toll is more than 2000, now every day more than 60 are being killed.

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