The following is an excerpt from “The Misperception of the Russian-Ukrainian Gas Problem“ by Dr. Gary Busch.  The one problem with the article is the assumption that Igor Sechin’s clan holds a controlling interest over Gazprom, instead of being in competition with that group as was previously believed.

The relationship between Russia and the Ukraine is not an arm’s length relationship. The oligarchs behind Gazprom realised that it could not get any money out of official deliveries to Ukraine. It “solved” that problem by privatising a portion of the gas trade to Ukraine – the portion going to customers able to pay for their gas. These customers used to pay the central Ukrainian gas company, Naftohaz Ukrainy, which did not pass on that money to Gazprom; what was put in place was a mechanism whereby these customers would pay less for their gas, but would pay directly another supplier, formally unrelated to either Ukrainian gas authorities or Gazprom.