Mar 03 - Russia's state gas producer Gazprom has warned Ukraine that it may increase the gas price for Kiev after the first quarter. It insists Russian gas transit to Europe via Ukraine is normal but for how long? Joanna Partridge looks at the impact of the Ukraine crisis on energy and other key commodities.
It's probably not the most opportune moment for Russia's state gas producer to be touting for business. But Gazprom went ahead with a long-planned investor conference in London, even though those attending were a little camera shy. Gazprom has warned it might increase the price it charges Kiev in the next quarter and says supplies to Europe via Ukraine are normal. But its share price took a knock - and oil and gas prices surged on Monday. And the mood inside the conference was subdued too says Ivan Mazalov, a portfolio manager with Prosperity Capital Management. SOUNDBITE: Ivan Mazalov, Portfolio Manager, Prosperity Capital Management, saying (English): "Investors are obviously concerned, but the Q&A was not so much concerning Ukraine, I think primarily because the management itself does not have the answers or cannot forecast the situation reliably." Russia is Europe's biggest gas supplier and much of it is pumped through Ukraine The region has been trying to wean itself off Russian energy for some time. It's less reliant this year due to a mild winter and improved infrastructure. But Moscow has previously cut off gas to Ukraine when negotiating prices, also hitting supplies to central Europe. John Kemp is a commodities columnist for Reuters. SOUNDBITE: John Kemp, Commodities Columnist, Reuters, saying (English): "It will underscore concerns about the reliability, Russia as a reliable gas supplier, and I think it will redouble European determination to find alternatives, but alternatives are really difficult. One major alternative is North Africa, that's not looking very stable at the moment, we're already very dependent on imports from the Gulf region, another fragile area. I think it may send European policymakers looking towards the United States." Turning to new sources of energy will take several years. It's not just oil and gas prices investors will be watching closely. Ukraine's also called the breadbasket of Europe and is in the top five global grain exporters. Global wheat and corn futures surged on Monday - despite promises from Ukraine's new agricultural minister that political turmoil will not reduce the spring grain sowing.