Ukraine and Slovakia signed a natural-gas transport deal Monday in what European officials hailed as the first step toward reducing Ukraine's heavy dependence on Russian supplies that are now more costly and at risk of being cut off as hostilities escalate between the two former Soviet republics.
The agreement signed in the Slovakian capital, Bratislava, envisions annually rerouting more than 8 billion cubic meters of natural gas from Russia and other suppliers to Ukraine through Slovakian pipelines, according to a summary of the deal provided by the European Commission. That would make up almost a third of the 28 billion cubic meters of gas Ukraine imported from Russia last year in the event Moscow follows through on threats to cut off Kiev.
The plan was brokered by
Russia this month boosted the price of gas to Ukraine by more than 80%, rescinding a discount offered Kiev last year when the Kremlin was trying to deter then-President
It was Yanukovich's unilateral decision in November to stay economically integrated with Russia instead of pursuing closer ties with the West that sparked a three-month rebellion that ended with the president's ouster and appeal for refuge in Russia.
Tens of thousands of Russian troops are massed on Ukraine's eastern border, and separatist actions in a dozen eastern Ukrainian towns and cities are believed by Kiev authorities to be instigated by Russia in preparation for further territorial seizures.
Slovakia has a contract with Gazprom to import and sell 50 billion cubic meters of Russian gas each year and has pipeline capacity to transport 90 billion cubic meters, the Kyiv Post reported, describing the potential for increased supply from Ukraine's western neighbor.
Although the deal isn't expected to inflict much damage on Gazprom's bottom line, Crane notes that Putin's Crimea gambit and fomenting of unrest in eastern Ukraine have dealt a severe blow to the Russian economy and its energy trade.
"They've shot themselves in the foot," he said of the Kremlin's military aggression that has scared away foreign investment and sent billions in capital fleeing abroad.
"This whole increased risk premium really hammers Russia," Crane said. "Growth is probably going to be negative this year."