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Friday, 28 March 2014

Ukraine Crisis Grows - NO FUEL!



Impendent fuel crisis in Ukraine will crash country's economy

The Voice of Russia


According to a recent statement made by the energy minister Yuri Prodan, Ukraine will run out of gasoline in the next 29 days. Given Ukranie's dire economic situation, a fuel crisis will surely crash the country's economy.

Impendent fuel crisis in Ukraine will crash country's economyMost oil refineries in Ukraine are owned by Russian companies or are operating on Russian crude oil. Since the beginning of political crisis, refineries have almost stopped producing gasoline and the imports of crude oil have ceased.

"If we talk about fuel, we have a stable situation. We estimate that we have enough fuel for 28-29 days", Prodan told RBK Ukraine. Of course, a situation in which a country receives no crude oil imports and has insignificant stocks of fuel can't be described as "stable", but the current Ukrainian "government" is known for its unjustified optimism.

The situation with the natural gas supplies is just as bad. According to Prodan, Ukraine can access 2 bn cubic meters of natural gas from its underground storage facilities. This quantity should be enough for covering between 2.5 and 3 months of consumption. However, after April 1st all of the existing discounts on Russian gas price will be canceled. In the past, Ukraine was unable to pay for natural gas deliveries even at discounted prices so, there is doubt that a crisis-stricken illegitimate government is alble to pay for gas deliveries at full price.

After Ukraine's debt to Gazprom reached 2 billion dollars, the Russian gas giant warned that the next deliveries will only be made after advance payments. It is highly unlikely that the self-appointed authorities in Kiev will find the funds necessary for the payments. Yuri Prodan's hopes that "reverse supplies" from the EU can help were dashed by a recent statement made by Slovakian government which stressed that Bratislava will not increase supplies to Ukraine to a level that can be "detrimental" to the Slovakian economy. Robert Fico, the prime minister of Slovakia, told the press that his priority is "to ensure the flow of Russian gas through Ukraine" and pointed out that although supplies from Slovakia can help Ukraine, his government is not in a position to fund such help.

Overall, the situation in Ukraine has not yet become a full-fledged fuel crisis but it is likely to evolve into one.

Regardless of the source, imports of crude oil and natural gas will require advance payments in hard currency while the country's budget is empty. Self-appointed Ukrainian authorities expect help from the US and the EU, but so far no one in the West has ...

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