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Kiev’s policy in gas talks will change when gas storage facilities empty out

June 18, 2014, 17:41 UTC+3 MOSCOW

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

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MOSCOW, June 18. /ITAR-TASS/. Kiev’s rhetoric towards Moscow on gas issues will change after Ukraine’s storage facilities empty out, Russia’s MP has said.

“The statements by (Ukrainian parliament-appointed Prime Minister Arseniy) Yatsenyuk saying Ukraine will not subsidise Russian Gazprom are ridiculous as long as gas is accumulated in Ukraine’s storage facilities,” the chairman of the State Duma, lower house, Foreign Affairs Committee chairman, Alexei Pushkov told a news conference on Wednesday.

On June 16, Yatsenyuk demanded the National Electricity Regulatory Commission immediately establish economically justified tariffs for Russian natural gas transportation on the country's territory.

“The National Electricity Regulatory Commission must immediately carry out my instruction. We will not subsidise Russian Gazprom," Yatsenyuk said.


Gas talks

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.


Gas price

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 Yuriy 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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