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Russia’s gas talks with Ukraine may resume only after debt paid — minister

June 19, 2014, 20:11 UTC+3 MOSCOW
Russian Energy Minister Alexander Novak said Gazprom had not received any payments from Naftogaz of Ukraine since Monday, June 16
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© EPA/OLIVIER HOSLET

MOSCOW, June 19. /ITAR-TASS/. Russian Energy Minister Alexander Novak said gas talks with Ukraine might resume only after Naftogaz of Ukraine has paid the debt for November and December 2013.

“There will be no talks before that,” Novak said at the World Petroleum Congress on Thursday, June 19.

Novak said Gazprom had not received any payments from Naftogaz of Ukraine since Monday, June 16, when the Russian company stopped gas supply to Ukraine in the absence of prepayment for June.

The payment deadline expired at 10:00 Moscow time on June 16, when Gazprom hoped to see $1.951 billion on its accounts. After that the company moved over to advance payments in settlements with Ukraine. “If nothing has been paid, nothing will be supplied,” Gazprom CEO Alexei 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.

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 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.

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.

Minister 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.

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

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”.

Infographics Russian gas in Europe Russian gas in Europe
One-third of gas consumed in EU comes from Russia. Infographics ITAR-TASS
“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.

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.

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