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Desperate Ukraine turns to Russia for Gas and Coal to Survive the Winter
Greetings,
Desperate Ukraine turns to Russia for Gas and Coal to Survive the Winter
Ukraine forced to turn to Russia as winter bites and foreign exchange reserves fall below critical levels.
With the cold weather closing in Kiev has paid $378 million to Gazprom to 1 billion cubic meters for December. Gazprom will to start to supply the gas either on Sunday or Monday.
On the same day there was news Ukraine intends to buy 50,000 tons of coal from Russia.
Kiev’s decision to buy coal and gas from Russia shows the tight corner Kiev is in. Its reserves of gas at 13.9 billion cubic meters are very low – nowhere near enough to cover needs for the winter.
The much talked about “reverse flow”, basically the resupply to Ukraine by certain EU states of gas Russia has supplied them, has failed to fill the gap. The war in eastern Ukraine has cut Ukraine off from coal mined in the Donbass. The attempt to buy coal from South Africa ended in scandal.
A reported accident at a Ukrainian nuclear plant shows that things are far from well with Ukraine’s nuclear industry. Already there are reports of rolling power cuts across Ukraine.
According to the Ukrainian government, Naftogaz, Ukraine’s state-owned natural gas provider, is running a deficit of $6.7 billion. The Ukrainian government is running a deficit of $4.4 billion. Neither Naftogaz nor the Ukrainian government seem to have any significant cash reserves left. Ukraine has not had any more money from the West.
So where is the money coming from?
The likely answer is from the central bank’s foreign exchange reserves. The payment of $1.45 billion that Ukraine paid Gazprom in November in part payment of its gas arrears is known to have come out of the central bank’s foreign exchange reserves. They now stand at just $9.97 billion – insufficient to cover even two months’ imports.
Ukraine must pay Gazprom a further $1.6 billion to clear more of its arrears by the end of December. If it is paid, this money will also have to come from the central bank’s foreign exchange reserves, pushing them down further…..more here
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