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Putin again employs natural gas as diplomatic weapon

The value of natural gas futures contracts increased 3.8 percent in a week as a result.

By Ed Adamczyk
Putin again employs natural gas as diplomatic weapon
Alexey Miller, Chief Executive of Russian state controlled company Gazprom (L) File Photo: Anatoli Zhdanov/ UPI | License Photo

MOSCOW, Feb. 25 (UPI) -- Russia has returned to threats of curtailment of natural gas shipments to Ukraine, and European gas prices rose on the prospect this week.

The Russian natural gas company Gazprom cited increased risks associated with shipping its product to Europe, and Tuesday suggested it would stop shipments to Ukraine over a long-running dispute over payments. Gazprom chief Alexei Miller warned as disruption of gas supply to Ukraine could have consequences for the rest of Europe. Tuesday Naftogaz, Ukraine's gas company, said only 47 million cubic meters of gas were delivered in February; 114 million cubic meters were expected.

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Gazprom claimed Natfogaz had not prepaid for direct shipments of gas to rebel-held areas in eastern Ukraine, where the Ukrainian army is battling pro-Russian separatists. On London's commodity markets, futures prices for natural gas jumped as much as 3.8 percent as a result.

Despite the aspects of a contract dispute, last week Gazprom began delivering gas to the rebel-held areas after gas lines were damaged in the military conflict, charging the Kiev government a "humanitarian" fee for deliveries. The move suggests Russian natural gas is part of a larger geopolitical strategy, more than a mere disagreement with a customer.

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"We got the impression that they (Russia) first ruined the gas infrastructure, and then decided to supply gas to (eastern) Ukraine," said Naftogaz Chairman Andriy Kobolyev last week.

The gas crisis comes amid other signs Russia is using its influence to force Western countries to assent to its plans to keep Crimea, which it annexed in 2014, and extend its reach into Ukraine. Monday Russia offered to sell advanced air-defense systems to Iran, despite Western hopes Moscow would not help to arm Tehran. Tuesday, U.S. Secretary of State John Kerry admitted in Congressional testimony Moscow had lied to him about Russian involvement with Ukrainian separatists.

The issue of natural gas comes at a time when Western powers are pushing Russia to remove itself from Ukraine, yet in need of Russian assistance to help disarm Iran. European reliance on Russian natural gas has become a valuable weapon in Putin's diplomatic arsenal.

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