Russian-Ukraine dispute highlights need for supply diversification

The Russian-Ukrainian natural gas dispute provides a reminder that some suppliers are willing to renegotiate contracts forcibly, even to the point of cutting off supplies, if the prices involved justify such actions. Diversifying sources of supply is key to avoiding being cut short if such events occur.The settlement reached between the two countries paradoxically reinforces Ukraine’s dependence on OAO Gazprom’s supplies. The European Commission has expressed serious concern regarding regional security of supply and will issue its first paper on European Energy Policy in second-quarter 2006, with final conclusions and proposals due by yearend.The dispute will likely have a lon...

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