Last December, Ukraine’s now-deposed, pro-Moscow president Viktor Yanukovych abandoned a trade deal with the European Union in favour of closer ties with Russia. One of the sweeteners in the $20bn support package that helped persuade him was a steep discount – around 30% – on the price that Russia’s gas giant, Gazprom, was then charging Ukraine for the natural gas on which it relies. This weekend, as relations between the two countries descended to an alarming new low, Moscow warned that the cut-price deal was unlikely to last much longer.
Gazprom, which controls nearly one-fifth of the world’s gas reserves and supplies more than half of the gas Ukraine uses each year, insisted the threatened price rise merely reflected cash-strapped Ukraine’s inability to meet its contractual obligations. The state-owned company said that Kiev owes it $1.55bn for gas supplied in 2013 and so far in 2014, and shows little evidence of paying up. But this is not the first time Russia has used gas exports to put pressure on its neighbour – and “gas wars” between the two countries tend to be felt far beyond their borders. Russia, after all, still supplies around 30% of Europe’s gas.
Is Europe's gas supply threatened by the Ukraine crisis?