Russia cut the pressure on natural gas pipelines to the Ukraine yesterday after a breakdown in talks over pricing and transit terms, according to a report by The New York Times. The reduction of flow of natural gas could be problematic for Ukraine’s recovering economy and possibly gas supplies to Western Europe, notes the Times.
Hungarian natural gas wholesaler MOL reported deliveries from the affected pipeline were down more than 25 percent by last night, according to a report by Reuters. The news agency also reported that supplies to Poland were down 14 percent.
Since the breakup of the Soviet Union, Ukraine’s natural gas program has been subsidized in part by Russia. Under the program, it was paying about $50 per 1,000 cubic meters of natural gas. Russia is now asking for $220 to $230 per 1,000 cubic meters, as it attempts to move to a market-based pricing system.
The reduced pressure will not lead to gas shortages in countries along the affected line, as the Times reports that the countries, including Ukraine, maintain reserves. However, reserves will run out if an agreement is not reached in the near future.
Courtesy of Flow Research
