Streetwise Professor

January 12, 2010

Deadbeats AND Hypocrites

Filed under: Energy,Politics,Russia — The Professor @ 9:25 pm

I’m sure you’ve read about Putin and/or Medvedev reacting with high dudgeon to Ukrainian failures to pay for gas in full and on time.  Oh, the lectures they can give.  The moral outrage!  How dare they not pay what they owe!  The nerve!  The idea!

Keep that image in mind when you read this:

Poland and Russia have yet to sign a gas delivery deal for 2010 due to Gazprom owing Warsaw around 410 million dollars.

Poland still has not signed a deal on gas supplies with Russian energy giant Gazprom, which should have been agreed at the end of last year. Poland is delaying the signing because the Russian company owes it over one billion zloty (410 million dollars).

Gazprom’s debt of 350 million dollars results from paying lower tariffs for gas transit in Poland as required by the Energy Regulatory Office. Additional 60 million dollars debt results from not delivering gas to Poland by Gazprom’s middleman company RosUkrEnergo in 2008. Later, the Russian gas giant took over the company’s debt.

As for now, Gazprom is willing to sign a new agreement on condition that Poland will cancel a part of its debt. The Polish gas company EuRoPol Gaz, however, does not want to make concessions, claiming that it would violate Polish law.

Just another example of the for-thee-not-for-me Russian commercial mentality, as if we needed another.  (The Producers episode in which Gazprom cut off gas imports from Turkmenistan, causing a pipeline blowup rather than meet its take-or-pay obligations is another great example.)  Keep that in mind the next time you hear Putin or Sechin or Medvedev or anybody in the Russian government caterwauling about somebody being a deadbeat.

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  1. And here is the rest of the article…

    “The Polish Russian debate on the gas deal opened last year. Russia has the advantage in the negotiations since Poland lacks infrastructure and secured gas supplies from other partners. There is also no consensus among Polish companies as to the agreement with Gazprom.”

    Comment by Leos Tomicek — January 13, 2010 @ 8:34 am

  2. I wonder if the above quote (in Comment 1) was referenced as a mitigating factor for non-payment of debt by Russia …

    Comment by MJ — January 13, 2010 @ 8:41 am

  3. There is probably much more to the issue than is apparent from the article.

    Comment by Leos Tomicek — January 13, 2010 @ 9:23 am

  4. So even at the face of the most apparent facts, you would like to find a hidden motive for the justification of what Russia does or might do – no matter what the issues and what the facts are.
    It sounds to me that you already have a position and a verdict [in justifying Russia no matter what it is]. And if some facts or data, for that matter, contradict to your position, you’d like to find and make other believe in the existence of something, which demonstrates that, nevertheless, your position is right.

    Comment by MJ — January 13, 2010 @ 9:45 am

  5. What apparent facts? The middle man was involved in the gas dispute between Russia and Ukraine, I don’t know the facts behind this debt and if you know them, please supply them.

    Comment by Leos Tomicek — January 13, 2010 @ 10:26 am

  6. The article conveyed that Russia owes $410 mln to Poland. This information, along with Russia’s desire to achieve debt reduction, as also conveyed by the article, was unambiguously stated. As you pointed, it was also stated that there are disagreements between the Polish gas companies. These are the facts from the article.

    Now, that there may be some hidden facts missing in this picture was your insinuation. You insinuated it and now you request that I bring facts. It is sort of not fair, I suspect. Therefore, I would rather reciprocate and ask you to bring the facts on the “hidden” aspects of the issue.

    Comment by MJ — January 13, 2010 @ 10:42 am

  7. You haven’t supplied the context of debt and why the Russians want reduction. Either way this situation does not vindicate the Ukrainians…

    Comment by Leos Tomicek — January 13, 2010 @ 11:32 am


    Ad. Turkmenistan, the gas explosion was blamed by the Turkmen on Gazprom, the Russians said it was because of aging infrastructure, now lets choose who are we going to believe. Again, either way the Turkmen crawled back…

    Comment by Leos Tomicek — January 13, 2010 @ 11:42 am

  9. It’s really quite simple: If you are Russian, then when Russia defaults on its debts that is just fine, no need for any public statement by the leadership. But if any country defeaults to Russia, that must be raised publicly and it automatically means the defaulting nation is filth, a banana republic that would be lucky to be conquered and ruled by Russia.

    For Russians, this is ironclad logic. For the rest of the world, it’s simply insane.

    Comment by La Russophobe — January 13, 2010 @ 12:28 pm

  10. If to put it mildly, I am surprised that I am the one here who owes context…

    Now, I think it is obvious to any unbiased person that one strives for debt reduction when, in the first place, he owes debt. But let me bring the following to your attention again, since it seems to me you read only the liens which support your preconceived positions:

    “Additional 60 million dollars debt results from not delivering gas to Poland by Gazprom’s middleman company RosUkrEnergo in 2008. Later, the Russian gas giant took over the company’s debt.”

    By the way, do you also have a similar “justification” for the remaining $310 mln?

    In view of the above reference, the first question to be raised is who owns the shares of RosUkrEnergo. And if it is owned by unrelated to Gasprom executives people, which would be next to impossible in modern day Russia in the first place, why would Gasprom “take over” the middleman’s debt?

    Regardless of the answer to these questions, given the fact of the takeover if nothing else, to contemplate on the “context” of debt here is equivalent of demagoguery.

    Comment by MJ — January 13, 2010 @ 12:44 pm

  11. Well demagoguery is also equating this debt with the Ukrainian without knowing the context of both.

    Comment by Leos Tomicek — January 13, 2010 @ 1:40 pm

  12. If you do need to know “the context” and you don’t know it, then why not to refrain from comments in the first place? Just what do you think you add to the dialog when simply saying “there may be a hidden context to the story?”

    And just out of curiosity, what was equated to the Ukrainian debt?

    Comment by MJ — January 13, 2010 @ 1:52 pm

  13. Leos: Your comments are very illuminating, as a pitch-perfect example of the true “logic” that underlies Russian thuggery and hypocrisy on these issues. Russia exploits its monopoly power over infrastructure to get those in its thrall to “crawl back.” Agreed. If you’re fine with that, that says a lot about you.

    Re Turkmenistan and “aging infrastructure”: Spare us, would you. The “aging infrastructure” didn’t have any problems until Gazprom, without warning, shut off its pipeline without warning, causing a pressure increase that resulted in an explosion upstream. And when did this happen? Right at the very time when Gazprom was in desperate financial problems, and didn’t want to pay its contractual commitments. Contractual commitments, I might remind you, that Gazprom, Putin, and Medvedev crowed about when they were signed, because they believed that they locked up Turkmen gas and kept it out of European hands. The crisis hit, and their genius didn’t look so smart anymore, so off goes the pipe. And if it was “aging infrastructure,” rather than an opportunistic attempt to escape contractual commitments, why wasn’t it fixed rapidly, as was technically possible?

    Ditto the Druzhba pipeline to Lithuania, which just happened to start leaking when the Lithuanians had the gall to sell an oil refinery to a Polish firm rather than the Russians–and which hasn’t been fixed since.

    So tell me, are the Russians just extreme incompetents, who can’t fix a pipeline in 9 months–or 4 years, in the case of Druzhba–or are they playing these kinds of games to extort and to punish those who don’t “crawl” to them? The question answers itself.

    I’ll give some “context” for your remarks. You are a homer who is so far in the tank for Russia that you need an aqualung.

    The ProfessorComment by The Professor — January 13, 2010 @ 3:06 pm

  14. Dear Prof, we could also ask why the Turkmen crawled back to the Russians? I guess they realised they are a bunch of notorious liars. The same way we could dismiss the Lithuanian wish to sell their refinery to Polish company. Please? Give me a break with that, even if what you said was true, and the Russian’s made the pipeline leak, for which you have no proof, it should be asked why the Lithuanians did not sell it Russians if they get most of their gas from them? Why Poles? Obstructing Russian business interests? There is nothing wrong with that, isn’t there?

    Call it thuggish, but I’d remind you that this is nowhere as thuggish as American policies in Latin America, next time when you decide to lecture Russians on their policies, remember that. 😉

    Comment by Leos Tomicek — January 13, 2010 @ 3:54 pm

  15. So, this seems to be the last resort of “you know whom,” I guess. If you have no other response to justify yourself, just say “you ain’t better.”

    Comment by MJ — January 13, 2010 @ 4:10 pm

  16. Yawn…

    Comment by Leos Tomicek — January 13, 2010 @ 4:29 pm

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