Washington Post: Gazprom and Ukraine in lucrative and difficult tango

Gazprom’s foreign customers are asserting themselves more boldly in their dealings with the giant Russian energy company. French, German, Slovakian and Turkish companies have renegotiated their contracts for natural gas; the European Union has launched an antitrust investigation; Lithuania recently filed a $1.9 billion legal claimagainst Gazprom over alleged price gouging.But no country is more bound up in Gazprom’s increasingly troubled fortunes than Ukraine. And no country has had as little success in dealing with Gazprom.Ukraine has simply been too important to Russian energy policy — and to the flow of money that policy supports.

Exports of natural gas to Europe account for 75 percent of the Russian energy company’s profits, and most of that gas goes through Ukraine. Ukraine itself is the company’s second-largest customer, after Germany. And for a decade, Gazprom and its revenues have been the most important financial support for the system constructed by President Vladimir Putin.

Now that support is in trouble, in the face of a dramatic decline in gas prices worldwide. But it’s not clear whether that will bring relief to Ukraine. Russia, in fact, is using Ukraine’s energy woes in an effort to bring the country squarely into Moscow’s orbit.  MORE