The Russian gas monopoly, Gazprom, stopped natural gas shipments to and through Ukraine Jan. 6. The shutdown came because of a price dispute with Ukraine. Gazprom, the Russian gas monopoly, wants to boost the price from $179.50 per thousand cubic meters to $450.
The Russians also accuse Ukraine of siphoning off gas destined for Europe. In addition, political analysts have been quoted in the international media saying that Russia is trying to pressure Ukraine to back away from its desire to enter the North Atlantic Treaty Organization.
The immediate impact of the Russian action is that Neochim and Agropolychim in Bulgaria were forced to shut down when the gas supplies were turned off.
More plants in Europe and Ukraine are expected to follow suit.
Late in the week, the Russian press was reporting that the Odessa portside fertilizer plant, OPZ, had suspended production due to gas cuts. While the plant could still get some gas, officials reportedly said it was not enough to keep the plant in operation.
The gas war hit the Polish fertilizers industry, and its first victim was the giant factory of fertilizers Pulawy in central Poland. On Jan. 7, the government cut gas deliveries by 12 percent in accord with a new law permitting the government to change gas deliveries to all firms.
While the government downplayed concerns about the Russian gas, citing six underground reservoirs and the Yamal Europe gas pipeline, gas does flow from Ukraine into southern Poland. Ukrainian Naftogaz has blocked gas deliveries to south European countries, including Poland. “We see an important crisis which may ruin Polish fertilizers and chemical industries,” said Andrzej Szczesniak, a Polish gas expert. Poland buys gas mainly from Russia and has agreements until the year 2022, but it is expected to resume talks with Gazprom on new deliveries to be held still in January.
At present all major fertilizers plants – Pulawy, Tarnow, Kedzierzyn, Anwil, and some smaller plants – are reportedly working normally, but the gas shortage could force them to make cuts in production.
Police fertilizers in northern Poland has reduced production by 15-20 percent, but one of the directors, Andrzej Siwiec, thinks that the factory will resume “normal production” in the forthcoming spring months. “Our farmers are doing now quite well and will be in new fertilizers to be produced by (the) Police plant,” he said, adding that the company wants to widen its products and is investing around $60 million to do so.