:: Russia - Ask the experts: Will there be a new gas war?

The experience of January 2006 and January 2009 shows that anything is possible. If the Kremlin starts looking for an excuse for turning off the tap, it will find it. Last winter Gazprom accused Ukraine of siphoning off 86 million cubic metres of gas intended for European exports. Note that during the period of conflict, Ukraine shipped to Europe 1450 million cubic metres and the total value of the gas allegedly stolen was $36 million. Instead of taking the case to trial, Gazprom cut off all exports and suffered direct losses of over $2 billion.

Too often decisions of Gazprom are driven by emotion, impulse and political motivation. That makes the Russian gas monopoly very unpredictable.

From our standpoint, any negative effect on Russian gas transit via Ukraine is unlikely this winter. We estimate that in 2010 Russian gas supply to Europe could rise by 18 per cent year-on-year to 115 billion cubic metres (bcm) thanks to the gradual economic recovery in the EU. According to our forecast, Gazprom will produce 510-512 bcm of natural gas in 2010 (10-11 per cent higher year-on-year). As for Ukraine, we regard the probability of a new gas dispute between the gas supplier and the transit country as low. For the record, in early 2009 Russia and Ukraine agreed that Ukraine would raise transit tariffs for Russian gas by 60 per cent effective as of 2010. Therefore, Naftogaz of Ukraine would have enough funds to pay for gas supply to Ukraine itself.

According to Putin, Ukraine will not be obliged to pay for more gas than it actually requires. Although the milder policy towards Ukraine could be seen as politically driven, we see indirect economic benefits for Gazprom.

We believe that, aside from political motivation from Russian officials to be flexible with Ukraine, Gazprom will receive certain benefits from also being more flexible. Timely payments from Ukraine imply predictable cash flow while uninterrupted deliveries mean stable cash flows from EU markets. The amount of gas which Naftogaz currently has in its underground storage facilities is sufficient to provide pumping pressure for transit gas in the heating season. Gazprom will also retain its long-term EU partners, who will not hasten to diversify from Gazprom's natural gas supplies.

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