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Russia believes it is impossible to return to $268 gas price in negotiations with Ukraine

May 19, 2014, 19:53 UTC+3 BERLIN
“We can discuss discounts on this sum if mechanisms of settling (Ukraine’s) outstanding debt and ensuring Ukraine’s further solvency can be found,” the Russian energy minister says
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© EPA/DARIUSZ DELMANOWICZ

BERLIN, May 19. /ITAR-TASS/. Russia is ready “to discuss discounts on gas prices with Ukraine but it is impossible to return to the price that existed in the first quarter of 2014,” Russian Energy Minister Alexander Novak told a news conference in Berlin after meeting EU Commissioner for Energy Gunther Oettinger on Monday.

“We believe that it is impossible to use the figure of $268 per 1,000 cubic meters of gas in our price discussions. That was the price for the first quarter established by a contract that had not been extended. We have the current contract and a price formula fixed in this contract according to which the price is $485. This is the price which can be considered,” Novak told journalists.

“We can discuss discounts on this sum if mechanisms of settling (Ukraine’s) outstanding debt and ensuring Ukraine’s further solvency can be found,” the Russian energy minister added.

“We do not understand the reasons for raising this question. The price of $268 cannot be considered under the current circumstances because it does not match even average European market prices,” Novak explained.

Since early April, Gazprom has increased gas prices for Naftogas Ukrainy by $200 from $268,500 per 1,000 cubic meters. Gazprom cancelled a 100-dollar discount for its Ukrainian partner for failure to meet the terms of an additional agreement to the gas contract - the provision of timely payment for gas deliveries. Another $100 in that 200 dollar increase come from liquidation of discount on the customs duty used to be provided under the Kharkov agreements.

At present, Naftogaz’s debt for Russian gas is valued at $3.5 billion.

Both the European Commission and Ukraine have confirmed the size of Ukraine’s outstanding debt for April 1, 2014.

“The Russian side continues meeting its gas commitments to Ukraine and European consumers,” he said, adding the debt remained unpaid on May 19.

“We said we had not received a single payment in more than two months. We heard both from Ukraine and the European Commission that they confirmed the existing debt both in terms of its volume and price,” Novak emphasized.

“It is not enough to pay the debt to normalise the situation,” Novak said. “We should assess financial and economic performance, and make it possible in the following years to execute regular payments, to pump gas into underground storage facilities in a timely manner and to normalise Ukraine’s economy.”

The minister noted that Russia was ready “to participate in Ukraine’s economic recovery and to contribute to it together with other partners, including the European Union countries”. As for the current situation, Russia “sticks absolutely to its contractual obligations,” he said.

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