Russia faces off with Ukraine over gas prices

Suzie Neuwirth
TENSIONS between Ukraine and Russia escalated over the weekend, after talks over gas prices failed to reach a resolution.

Russia nearly doubled the price Ukraine pays for its gas last week, using its supplies as a political pawn in the face of an ongoing dispute over the sovereignty of the Crimea region of Ukraine.

Ukraine warned on Saturday that it would take Russia to an arbitration court if talks failed to roll back the price increase. Ukraine gets more than half of its domestic gas from Russia. Moscow raised the price it charges Ukraine to $485 per 1,000 cubic metres from a previously discounted price of $268.50, making Ukraine’s bill by far the highest in Europe for Russian gas. Interim prime minister Arseniy Yatsenyuk said Ukraine would continue buying gas at the “acceptable market price” of $268 per 1,000 cubic metres.

Russia supplies around 30 per cent of Europe’s gas, much of which comes via Ukraine, so a political stalemate has sparked fears of a disruption to energy supply in the continent.

“It’s important for us to continue to discuss what we do in the future to reduce Europe’s energy dependence on Russia to make sure that we change the balance of leverage between Russia and the EU in the future,” said British foreign secretary William Hague on Friday.

But the UK – and British customers’ energy bills – should not be affected by the impasse.

“The UK receives less than one per cent of its gas from Russia, less still if we just consider gas coming through Ukraine, and gas prices are falling as we head into summer,” said a spokesperson for the Foreign and Commonwealth Office.

“We therefore do not foresee any significant impact on UK gas prices as a result of this increase but will continue to monitor.”