Russia’s Brilliant Plan for Ukraine Gas Transit

I just read this TASS news item. My first reaction was “Whoa! This needs a closer look.”

Gazprom did not offer Ukraine to buy Russian gas, company says’ – TASS

Now, what I am going to say here is entirely my own personal take on the situation. It may or may not reflect actual truth. See what you think. If I am correct, this is genius at work – someone else’s genius, not mine. What a plan.

Ol’ Joe of the Biden clan, the walking stiff who reportedly represents leadership of the ‘free world’ – whatever that is (and there doesn’t appear to be a usable definition of that at this point – unless you take the one that says ‘Everything that is not “The West”‘) – obviously thinks he has pulled off a winning ticket, or the best worst case ticket he could expect to pick, against Russia. He recently agreed with Germany (who must be laughing into their cuffs) a ‘clever’ ruse to trick Russia into continually transiting Russian gas through the existing pipeline in Ukraine to EU countries, in return for himself (the US) allowing (allowing? ALLOWING?? That’s a laugh in itself. He has no way of stopping an at least 98% completed project which Germany and other European sovereign nations want and need) the Nord Stream 2 project to go ahead to completion. Excuse me while I giggle a little into my own cuff – and I haven’t got to the punchline yet.

Now, I am not certain on the current details here but Ukraine has in the past, as its only source of gas, taken supplies for its own use from the transiting pipeline on its own territory, by contractual arrangement with Russia – at very low prices (mates-rates if you like), as valued friends – brothers even – of Russia. This is where it becomes hazy for me. Since 2014, following US illegal regime change operations in Ukraine, which seem to have more bankrupted an already impoverished nation, more than helped it (the Biden family personally syphoning millions if not billions of dollars from that state into their own pockets). With the result that Ukraine stopped paying for its gas and was in debt for a large sum to Russia. I don’t know if that debt has ever been repaid but Russia kept supplying gas for Ukraine until (and perhaps since) the contract period ended. Of course neither Ukraine’s new ‘friend’, the US, nor the EU, have done anything to reduce the nation’s plight. Ukraine is of course desperate for Russian gas to keep transiting its territory so that sufficient supplies for its own people can be diverted. They are unwilling however to enter into new contractual arrangements with Russia for supply of such gas.

Europe, or parts of Europe, also rely on gas coming through Ukraine as it always has done, and have current contracts with Russia for such supplies. There is no current contract for gas supply for Ukraine – even though such has been offered by Russia. As far as I am aware, Russia has at no time suggested that the pipeline through Ukraine will close. Even with the opening of Nord Stream 2 the Ukraine pipeline will still be necessary.

So, what has changed? Nothing really. There is no ‘victory’ for Joe Biden. Europe will soon benefit from a new seabed transiting gas source from Russia. The Russian economy will continue to grow and flourish. Oh, but wait. Something has changed.

Sharp-brained Russians have come up with a new slant on gas transits through Ukraine territory. A brilliant idea – which if it includes some payback for EU anti-Russian sentiment and unnecessary sanctioning, would be entirely understandable and deserved.

This TASS story hints that Russia may after 2024 (which is presumably when current gas contracts terminate) reposition its gas transit points from the western to the eastern borders of Ukraine. Thus placing responsibility for the Ukraine transit leg of the gas journey either on the Ukraine government or the EU end-user nations and absolving Russia from any consequent headaches. That is a masterstroke of industrial, commercial and geopolitical diplomacy.

Who is going to subsidise Ukraine then, post 2024?

No contract has been offered to Ukraine for post 2024, so EU nations with Russian gas contracts for that time will need to arrange with Ukraine for their own gas to transit its territory. Of course any such arrangement might contain arrangements for gas supply to Ukraine as part of the transit payment. So there is potential for everybody to be happy (except Joe), and Russia will have stopped costly leakage in support of a crippled nation.

Of course we have all to actually reach the year 2024 yet. And that is no given.


Correction, added July 28, 2021…

In this post I incorrectly said there is no current gas contract between Russia and Ukraine.  This was said in good faith because I knew that there was a period, post 2014, when Ukraine refused to renew such contract.  However I now understand, quoting a later TASS report, that…

“In December 2019, Moscow and Kiev negotiated extension of Russian gas transit via Ukraine for the period from 2020 to 2024 with an option of agreement extension for ten years more.”

https://tass.com/economy/1318323

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