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Russian minister: Ukraine has no right to revise gas price unilaterally

May 03, 2014, 22:43 UTC+3 MOSCOW
Under the contract, the price of gas supplied to Ukraine is determined by the formula that is pegged to the price of oil
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Russian Energy Minister Alexander Novak

Russian Energy Minister Alexander Novak

© ITAR-TASS/Gennady Hamelyanin

MOSCOW, May 03. /ITAR-TASS/. Ukraine has no right to revise the price of gas from Russia unilaterally, Russian Energy Minister Alexander Novak said on Saturday, May 3.

He said the issue of gas price had been raised by the Ukrainian delegation at the trilateral consultations in Warsaw on May 2. “We did not want to discuss this issue at the consultations because we think that there are no grounds for discussing it,” Novak said.

He recalled that the contract signed 2009 was still in force. “The contract has been in effect for five years and has been implemented. Ukrainian Energy and Coal Industry Minister Yuri Prodan reaffirmed this yesterday,” he said.

Under the contract, the price of gas supplied to Ukraine is determined by the formula that is pegged to the price of oil. “This formula is used everywhere in the world for pipeline gas supplies. Therefore there are no grounds to discuss the price today and especially unilaterally offer the first quarter price of 268 U.S. dollars per 1,000 cubic metres as the Ukrainian authorities are doing,” Novak said.

Parliament-appointed acting President Alexander Turchinov on May 1 instructed the Ministry of Energy and Coal Industry to secure gas supplies from Russia at the price that was in effect in February and March 2014.

If Russia disagrees to meet the demand, the relevant Ukrainian ministries and agencies have been instructed to “file a corresponding lawsuit with an international court of arbitration within a month of the receipt of the notice”.

Ukraine’s overall debt for Russian gas has grown to 3.492 billion U.S. dollars, Gazprom spokesperson Sergei Kupriyanov said on April 30.

“Considering Naftogaz of Ukraine’s request for April 30 and the volumes we have already delivered this month [in April], Ukraine’s overall debt for Russian gas, according to preliminary estimates, will be 3.492 billion U.S. dollars,” he said.

The overall amount of gas imported by Ukraine in April was 2.7 billion cubic metres. With the price of 485.5 U.S. dollars per 1,000 cubic metres, Ukraine’s debt had increased by 1.3 billion U.S. dollars by May 1 and reached 3.5 billion U.S. dollars.

Prodan said Ukraine was ready to pay its debt to Russia’s Gazprom for gas supplies at a price of 268.5 U.S. dollars per 1,000 cubic metres.

“Ukraine is ready to pay the debt. But we cannot pay the price Gazprom set from April 1. It is unjustifiably high and is about 500 U.S. dollars. We are ready to pay under our obligations,” the minister said.

He disagreed with price of gas set by Gazprom which put Ukraine’s debt for gas at 3.5 billion U.S. dollars.

Parliament-appointed Prime Minister Arseny Yatsenyuk also reiterated that Ukraine was prepared to pay the price of 268 U.S. dollars per 1,000 cubic metres of Russian gas.

This is 45% below the established price of gas. If Moscow disagrees, Kiev will be prepared to contest its debt in court, he said.

Yatsenyuk told reporters that a “note” had been sent to Russia’s Gazprom, which “states the price”. If Gazprom accepts the proposed terms, Ukraine will pay the gas debt of 2.2 billion U.S. dollars immediately. If no solution is found within 30 days, the dispute will be taken to court.

“We have come to agreement on a trilateral meeting between Ukraine, the EU and Russia to settle the gas conflict. But I would like to recall that Ukraine has sent a pre-arbitration claim to Gazprom. If the positions are not reconciled and Ukraine’s demands are not met within 29 days, we will meet in Stockholm’s international court of arbitration,” he said.

“The government invites Gazprom to meet on neutral ground in London and discuss all issues. We will defend the interests of Ukraine using all lawful methods and the best lawful method is the court in Stockholm,” Yatsenyuk said.

Russia abolished the zero duty on gas for Ukraine on April 3, which automatically raised the price of gas for Ukraine from April 2014 to 485 U.S. dollars per 1,000 cubic metres, an increase of more than 200 U.S. dollars from the price that was used until then.

In December 2013, Russian Gazprom and Naftogaz Ukrainy signed an addendum to the gas agreement in effect from January 19, 2009, under which the price of Russian natural gas for Ukraine was to be reduced by one-third to 268.5 U.S. dollars per 1,000 cubic metres from January 1, 2014, compared to 410 U.S. dollars per 1,000 cubic metres in the fourth quarter of 2013.

Moscow and Kiev also agreed that the discount would remain in effect as long as the key conditions were met, specifically timely payments for current supplies and repayment of debts.

At the end of the first quarter of 2014, Gazprom said it would have to raise the price of gas for Ukraine by more than 100 U.S. dollars to 385.5 U.S. dollars per 1,000 cubic metres because Ukraine had failed to pay the debt for the gas delivered in 2013 and had not made payments for current supplies.

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