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Ukraine unable to pay for gas supplies even with discount — energy minister

May 15, 2014, 14:41 UTC+3 MOSCOW

According to Russia’s Energy Minister Alexander Novak, the Russian side does not have any guarantees that Ukraine would be able to pay for gas supplies with any discount

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©  AP Photo/Bela Szandelszky

MOSCOW, May 15. /ITAR-TASS/. Russia does not see that Ukraine has any possibilities to pay for natural gas supplies even if discount provided due to the economically complicated situation in the country. Russia’s Energy Minister Alexander Novak stated this on Thursday.

He added that the Russian side does not have any guarantees that Ukraine would be able to pay for gas supplies with any discount.

“We do not have guarantees that even if a price of $100 will be set, these bills would be paid by the Ukrainian side. What we see today is a complete insolvency,” the minister noted.

Earlier, parliament-appointed Minister of Fuel and Energy of Ukraine Yuriy Prodan stated that Ukraine was ready to pay the debt for supplied Russian gas “within 10 days, if Russia goes back to the price of $268.5 for 1,000 cu. m”.

Ukraine is ready to pay about $4 billion of debt for Russian gas until the end of May in case if the price is set at $268.5  for 1,000 cu. m, Deputy Minister of Fuel and Energy of Ukraine Ihor Didenko said.

Replacement for Crimean gas

The national oil and gas company of Ukraine Naftogaz addressed to Gazprom with a proposal to fill subterranean storages of Ukraine with about 2 billion cu. m of fuel as a compensation of similar amounts of natural gas, which are located in storage in Crimea and belong, as Kiev believes, to the Ukrainian side. This was also stated by Ihor Didenko May 15.

“Unfortunately, there are 2 billion cu. m of gas on the territory of the Crimean peninsula, which are economical property of Naftogaz,” he said. Didenko informed that within the framework of pre-trial proceedings (Naftogaz earlier sent an official notification to Gasprom about the intention to strive for decrease in the price of Russian gas import with the Stockholm arbitrary court. — ITAR-TASS) the Ukrainian side has addressed Gasprom with a proposal “to fill subterranean storages of Ukraine with about 2 billion cu. m”, which would be particularly used for residential users in Ukraine.

Switch to prepayment mode

May 13, Gasprom forwarded a provisional invoice to Ukraine for gas supplies in June proceeding from supplies volume of 114 million cu. m per day. Inclusive of weekends, Naftogaz should pay the invoice until June2, and from June 3 on, the company would be receiving natural gas for supplying Ukrainian consumers only in the amount of volumes paid, according to Gasprom spokesperson Sergei Kupriyanov. The Ukrainian company should prepay $1.66 billion.

All in all, Naftogaz is supposed to import 3.42 billion cu. m of Russian gas in June. The gas price for Ukraine currently makes $485.5 for 1,000 cu. m. 

Ukraine’s gas debt

Since the beginning of May, Ukraine’s Naftogaz has acquired 1.350 billion cu. m of Russian gas. In April, Ukraine has imported 2.7 billion cu. m, according to Gasprom.

To date, the outstanding debt of Naftogaz amounts to $3.508 billion, therefore “no one has a doubt that this is a substantial and non-biased reason for applying the relevant paragraph of the contract on prepayment,” Kupriyanov said May 13.

“If you buy natural gas, you should pay for it. All gas companies have specific payment conditions,” said Gertjan Lankhorst, head of International Gas Union, commenting on the issue of Nagtogaz’s nonpayment for Russian gas, its debt and the switch to prepayment mode. He believes that the switch to prepayment mode “may be more difficult for the client in terms of payments”. “If as a result of that, consumers will not receive gas, this would surely affect Ukraine, and, I’m afraid, Europe as well,” Lankhorst said.

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