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Ukraine hopes to continue gas talks within tripartite format

June 18, 2014, 14:18 UTC+3 KIEV
“I hope the dialogue will be continued because the three parties seek to find a solution. Ukraine upholds Europe’s initiative,” Ukrainian Deputy Minister of Energy and Coal Industry Vadim Ulida said
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© ITAR-TASS/Alexander Baran

KIEV, June 18. /ITAR-TASS/. Ukraine’s government official has expressed hope that Kiev will continue the gas talks with Russia.

The European Union should be involved in the talks, Ukrainian Deputy Minister of Energy and Coal Industry Vadim Ulida said on Wednesday.

“I hope the dialogue will be continued because the three parties seek to find a solution. Ukraine upholds Europe’s initiative,” Ulida said.

On Tuesday, June 17, European Energy Commissioner Guenther Oettinger told Reuters that the European Commission wanted to arrange another round of three-party gas talks, involving Ukraine and Russia, by mid-July.

The European Commission hopes to find a solution to the gas problem during the summer, when there is enough gas in storage and the demand is low, Oettinger said.

“No doubt we are in a sensitive situation. We are in June, so it's not really urgent today, but it's my concern and my ambition to use the summer time (to solve this crisis),” he said.

He also said he planned to talk to Ukraine in the coming days to try to organize bilateral talks next week. After that, he said he would speak with Russia to arrange another round of three-party talks by mid-July.

Russian Energy Minister Alexander Novak told ITAR-TASS that the gas talks within the Russia-Ukraine-EU format could continue only if Kiev paid its $4.5 billion debt, regardless of EU’s suggestions to carry on.

“Our position remains the same: talks, consultations can continue only after Ukraine repays its debt,” Novak said. “Are we ready to meet in July? Generally, we are.”

Russia, Ukraine and the European Union met on late Monday in Brussels for the fifth round of the three-party gas talks, which lasted for almost eight hours and ended on early Tuesday with the participating sides failing to reach a final agreement.

Gazprom started supplying gas to Ukraine on a prepayment basis from 10:00 June 16 for its failure to pay for the previous supplies. The deadline for the payment of the debt expired on Monday morning.

Ukraine’s debt is $4.458 billion, including $1.451 billion for November and December 2013 and $3.007 billion for April and May 2014.

In December 2013, Russian Gazprom and Naftogaz 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 per 1,000 cubic meters from January 1, 2014, compared to $410 per 1,000 cubic meters 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 to $385.5 per 1,000 cubic meters because Ukraine had failed to pay the debt for the gas delivered in 2013 and had not made payments for current supplies.

The gas price of $385 per 1,000 cubic meters offered by Russia to Ukraine is not the best one on the market, Ukrainian Energy and Coal Industry Minister Yuri Prodan said after trilateral talks with Russian and EU officials in Brussels on June 11.

“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.

Russia proposed renewing a $100 discount for gas supplies to Ukraine, but Kiev turned down the offer.

Yatsenyuk 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 meters. Ukraine is insisting on the price of $268.5. However, this week Gazprom lowered the price of gas supplied to Ukraine in April and May to $384.86 per 1,000 cubic meters.

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

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