Gazprom - Naftogaz Ukrainy Dispute: Business or Politics?

Some analysts felt that it was Gazprom which was undersupplying gas to Europe and blaming Ukraine, so as to bring European pressure on Ukraine to agree to its new price for gas.Gazprom then invited SGS to oversee the amount of gas it was pumping at its stations meant for Europe, passing through Ukraine. Ukraine, however, refused to allow observers to undertake similar inspections.

Under the terms of the various treaties that the former Soviet Union had with the European countries, Russia, and thereby Gazprom, was obliged to supply gas till its former Soviet borders. From there, the European countries took over the responsibility of gas delivery. So even if Ukraine was withholding or illegally siphoning off Russian gas meant for Europe, it was Russia that could be sued, and not Ukraine. On January 4, 2006, Gazprom and Naftogaz announced that they had reached a settlement, wherein RosUkrEnergo, a Swiss registered company, agreed to buy the gas meant for Ukraine from Gazprom at $230 per Tcm and supply it to Ukraine at $95 per Tcm after mixing the Central Asian gas bought from Turkmenistan and Uzbekistan at $60-65 per Tcm.