I haven’t found a great many voices claiming that the Russia-Ukraine gas dispute is some sort of Russian power play. Which is a good thing, because, as a friend recently explained to me, it isn’t. While some of its dynamics are fairly complicated, there’s also a very simple process at work here.

Gazprom is badly over-leveraged from its many acquisitions–some driven by its apparent goal of becoming a Russian zaibatsu.

Gazprom itself is mired in debt, and was recently included on a list of companies eligible for a government bailout. Its shares, which once valued the company at over $300 billion, making it the world’s third largest, have fallen 76% since the financial crisis hit in September.

Gazprom’s wholesale contracts put it in an even worse spot, as Steve LeVine explains:

Regarding the latter, Gazprom’s troubles go far. It doesn’t produce much of the gas it ships to Europe, but markets gas it buys mostly from the Central Asian state of Turkmenistan. In order to obtain long-term rights to that gas, and not have it siphoned off by a covetous West, Gazprom has agreed to pay the Turkmen about $340 per 1,000 cubic meters.

Given market prices, that means that Gazprom might be forced to sell to Europe this year at a loss, unless it unilaterally cuts the price it pays to the Turkmen, who in that case could respond by withholding supplies.

“Gazprom is in a tough spot,” says Kenneth Medlock, a natural gas expert at Rice University’s James A Baker Institute for Public Policy, who helped me with the calculations for this article. If Gazprom loses the Turkmen supplies, Medlock said, “they are going to have trouble meeting their contractual commitments” to Europe.

So it isn’t surprising that Gazprom very much wants to collect what it says are back payments owed by its Ukrainian client, or that we’re seeing a revival of the perennial dispute over how much Ukraine pays for natural gas.

To complicate matters, Ukraine’s gas company, Naftogaz Ukrainy, claims it paid RosUkEnergo, itself half-owned by Gazprom, and that whether Gazprom gets paid is RosUkEnergo’s problem. This kind of stuff is, I imagine, part of why Jerome of The Oil Drum characterizes the dispute as mainly about the distribution of loot among oligarchs.

Gazprom, moreover, seems to be using the quarrel as an excuse to scapegoat Ukraine for its possible implosion. Rumor has it, in fact, that the Kremlin is already funneling money into Gazprom to keep it afloat.

In other words, best to see what’s going on not as a sign of Russian muscle, but of Russian weakness.

The bigger question, frankly, is how serious Russia’s rentier-state blues will be, and what this will mean for Putin’s regime.

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