The European gas market has become more integrated and more competitive since the 2009 gas crisis when Russia turned off the tap for nearly a week and Europe practically froze. Europe has increased the resilience of its gas system by building interconnections between pipelines, expanding its storage network, and diversifying gas supplies by creating infrastructure that can receive LNG from new suppliers like the United States, Qatar, and Saudi Arabia. Although Russian gas supplies still remain the largest and most cost-efficient arrangement, a more market-based system of hub gas pricing is gaining popularity. All of these changes have provided Ukraine with a historic chance to end its energy dependence on Russia by integrating with the liberalized European market.
The issue of gas supplies has always been politically charged in Ukraine, as the country has heavily depended on Russia for gas. The 1990s saw Russian Gazprom, which had a monopoly, choose traders for its gas in Ukraine, many of whom eventually became powerful Ukrainian oligarchs. In the 2000s, gas supply contracts between Russian and Ukrainian energy monopolies were managed by murky intermediaries, feeding the corrupt political class in Ukraine. In numerous instances, the price of gas was used to getting political concessions; one example was the Kharkiv agreement of 2010, in which then-President Viktor Yanukovych gave a twenty-year extension to the Russian Black Sea Fleet’s stay in Crimea in exchange for a discounted price.
