Gas on the front line in Russia – Ukraine crisis

Russian gas – a weapon of strength or of weakness in the Ukraine crisis? Gazrpom has indicated it may raise prices for Kyiv in the next quarter. Currently Moscow sells to its neighbour at a hefty discount as part of 20 billion dollar support package. Negotiations are ongoing to maintain the cut price deal but if no agreement is reached the price could rise in the second quarter. Around 70 percent of Ukraine’s imported gas comes from Russia, currently it has cut back and is using up gas in storage. About 30 percent of Europe’s supplies come from Russia half of which transit through Ukraine. In two recent commercial disputes with Naftogaz – Ukraine’s state energy company Gazprom cut commercial deliveries disrupting supplies to much of Europe. Analysts believe playing the gas card in this crisis could be to Russia’s disadvantage. Its stock fell more than 13 percent amid market jitters over gas flows via Ukraine. But at its annual meeting with investors the Russian state company said it believed Europe would become even more dependent on Gazprom’s supplies