IEA Statement on Russia-Ukraine gas dispute

The IEA has consistently sought greater transparency in European gas markets, including in transit and sales arrangements, including those between Ukraine and Russia. Where intermediary agencies are involved, the gas flow and pricing arrangements should be much more transparent, including transit costs. Commercial disputes should be settled by normal dispute resolution mechanisms. Interruption of supply, such as Russia’s move to reduce gas deliveries to Ukraine, is a particularly harsh tactic, especially late in the winter. Russia has used this tactic before with respect to Georgia, Armenia and Belarus, all of whom were paying relatively low prices. This series of disagreements has continued over an extended period. The time may have come to seek neutral arbitration to reconcile the amounts of gas used, contracted and paid for, including stored gas, and once audited, to agree a schedule to make good outstanding payments, and adhere to it, by all parties. In the interim, third party gas users should not be affected by such activity. Russia has been an extremely reliable gas supplier to Western Europe over nearly four decades, with the notable exception of a two day interruption at the beginning of 2006, related to an earlier phase of this on going dispute. Another interruption to western consumers would severely tarnish Russia’s reputation as a reliable supplier.