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Gazprom not to postpone gas payment deadline for Ukraine anymore

June 12, 2014, 19:00 UTC+3 MOSCOW
Gazprom's head said the current situation differed from that in 2009 when “Ukraine paid, whereas now it is not paying and is not going to”
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© EPA/MAXIM SHIPENKOV

MOSCOW, June 12./ITAR-TASS/. Gazprom will not postpone the payment deadline for Ukraine anymore, Gazprom CEO Alexei Miller said on Thursday, June 12.

The current deadline is 10:00 Moscow time June 16, when Gazprom should see $1.951 billion on its accounts. Otherwise, the company will move over to advance payments in settlements with Ukraine. “If nothing has been paid, nothing will be supplied,” Miller said.

Naftogaz of Ukraine should pay $1.454 billion for gas supplies in November and December 2013 and show progress in paying for April and May, he said.

Ukraine’s debt had grown by $2 billion during the trilateral consultations between Russia, Ukraine and the European Union, and now Kiev has to pay for 11.150 billion cubic metres of gas supplies to Ukraine up to date, Miller said.

He described Ukraine’s position at the talks as “blatant blackmail”, “absurd, ultimatum-like and unconstructive”.

Miller said the current situation differed from that in 2009 when “Ukraine paid, whereas now it is not paying and is not going to”.

He said parliament-appointed Prime Minister Arseniy Yatsenyuk had upset the last round of gas talks with his statement that Ukraine would not pay more than $268 per 1,000 cubic metres of gas.

The European Union found Yatsenyuk’s statement inopportune, he added.

If gas is a political weapon, then this is a political weapon in the hands of the Russian government. If gas is a commodity, as it is in the rest of the world, we trade on the basis of a contract, not on the basis of whether Russia likes the Ukrainian government or not Arseniy Yatsenyuk Parliament-appointed Prime Minister Yatsenyuk also said his government was insisting on changes to the effective gas contract. “If gas is a political weapon, then this is a political weapon in the hands of the Russian government. If gas is a commodity, as it is in the rest of the world, we trade on the basis of a contract, not on the basis of whether Russia likes the Ukrainian government or not,” he said.

The current price of Russian gas for Ukraine is $485 per 1,000 cubic metres. Ukraine is insisting on the price of $268.5.

Russian Energy Minister Alexander Novak suggested returning to the 2010 agreement under the current contract effective until 2019, which will set the price at $385 per 1,000 cubic metres.

The new price has been in effect since June 1. “The overall debt for the supplies in April and May is $2.3 billion”, he said.

Miller said that Ukraine had taken 3.5 billion cubic metres of gas in May and 2.7 billion cubic metres in April.

Initially, the debt for the first two months of the second quarter was put at $3 billion based on the price of $485.5 per 1,000 cubic metres.

Under the contract between Naftogaz of Ukraine and Gazprom, 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 per 1,000 cubic metres as the Ukrainian authorities are doing,” Novak said.

However, Ukrainian Energy and Coal Industry Minister Yuriy Prodan said the gas price of $385 per 1,000 cubic metres offered by Russia to Ukraine was not the best one on the market.

“We have many proposals, including on reverse flow supplies at a price much lower than $385. Given the transit across Ukraine and back to European countries, we can say that Gazprom’s price can be lower than what European suppliers are offering now,” the minister said.

Prodan said an acceptable gas price for Ukraine could be within the range of $268.5 to $385.

“If the matter is examined in the Stockholm court, Ukraine will be prepared to agree to the compromise price proposed by the European Commission. I do not want to name it, but it is within the range of $268.5 to $385 per 1,000 cubic metres,” Prodan said.

He believes that the only way to settle the gas dispute with Russia is to take the matter to the Stockholm court of arbitration.

Prodan said Ukraine was ready to continue the gas talks “while waiting for the decision of the Stockholm court of arbitration”.

“We will disagree if any part of the price depends on a government decision. We want to change the entire pricing mechanism,” the minister said.

Infographics Russian gas in Europe Russian gas in Europe
One-third of gas consumed in EU comes from Russia. Infographics ITAR-TASS
European Energy Commissioner Guenther Oettinger said Russia’s Gazprom and Naftogaz of Ukraine should come to agreement on the price of gas and volumes of supplies for the next 12-15 months as a minimum.

Oettinger said Ukraine considered the price of $385 overstated and depending on a political decision of the Russian government.

He urged Russia and Ukraine to coordinate their positions at all levels, including that of the heads of state, in the next few days.

He said the European Commission hoped to get a solution to the gas issue by next Monday, June 16.

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