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Russian Energy Minister, EU Energy Commissioner agree to meet next week

July 07, 2014, 21:36 UTC+3 GENT - Russian Energy Minister Novak

According to the Russian Energy Ministry, the talks will touch upon the key issues of Russian-European energy relations

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European Energy Commissioner Guenther Oettinger

European Energy Commissioner Guenther Oettinger

© AP Photo/Markus Schreiber

MOSCOW, July 07. /ITAR-TASS/. Russian Energy Minister Alexander Novak and European Energy Commissioner Guenther Oettinger on Monday agreed to hold a bilateral meeting at the end of next week, the Russian Energy Ministry said after Novak and Oettinger held phone talks.

“The venue and date for the meeting are being specified,” the ministry said.

According to the Russian Energy Ministry, the talks will touch upon the key issues of Russian-European energy relations.

Earlier Novak said that during their phone talks, the sides wanted to agree on a meeting, to discuss the situation with the South Stream gas pipeline and consider issues connected with the pumping of gas into underground storage facilities and provision of gas to European consumers.

Russian state-controlled energy giant Gazprom is implementing the South Stream project to diversify deliveries of natural gas to Europe bypassing Ukraine and reduce dependence on transit countries.

On June 2, the EU’s executive body, the European Commission, voiced its intention to suspend implementation of the South Stream project in EU countries, first of all in Bulgaria. Oettinger’s spokeswoman Sabine Berger said the EC gave two legal grounds for such a step.

First, she said, the EC has problems about whether the project conforms to the norms of the EU’s Third Energy Package - a legislative package for the EU’s gas and electricity market. Besides, Brussels suspected Sofia of violating European regulations to hold tenders for construction of infrastructure projects and of granting privileged opportunities to Russian and Bulgarian companies.

Earlier, Oettinger said after talks with Ukrainian parliament-appointed Energy and Coal Industry Minister Yury Prodan that the European Commission hopes for resumption of three-party gas talks with the Russian Federation and Ukraine by the end of July.

Oettinger did not specify if Ukraine is ready to start paying off its gas debt to Gazprom that Moscow had been expecting during six rounds of three-party talks from May 2 to June 16, when they were deadlocked.

In turn, Prodan then told Russian journalists that Ukraine “is ready to discuss at the talks only an intermediate package proposal of the European Commission” on the price and debt settlement, saying Kiev’s position regarding the debt remained unchanged.

“We will repay the debt as soon as an agreement on the price is reached,” Prodan said. “Should no agreement be reached, the Arbitration Institute of the Stockholm Chamber of Commerce will put the final period.”

Gazprom on June 16 switched Ukraine’s oil and gas company Naftogaz to prepayment for gas supplies because Kiev failed to pay part of its gas debt by the deadline of 10:00 Moscow Time on June 16.

Gas supplies to Ukraine were halted, but transit volumes were reportedly passing via Ukraine to Europe in line with the schedule.

Gazprom said June 16 that Naftogaz’s past due debt for supplied Russian gas totals $4.458 billion: $1.451 billion for November-December 2013 and $3.007 billion for April-May 2014.

Russia recently substantially raised the gas price for Ukraine to $485.5 per 1,000 cubic meters, but Ukraine has insisted the price should be lowered to that of this year’s first quarter ($268.5 per 1,000 cu m).

Moscow raised the price for Kiev to $385.5 per 1,000 cu m in the second quarter of 2014 because Ukraine failed to fulfill its commitments under an additional agreement concluded in December 2013, which obliged the country to pay for supplied volumes of Russian gas in time.

Another raise to $485.5 per 1,000 cu m was due to the cancelation of the Kharkov Accords with Ukraine, which had been struck in 2010 and stipulated that Russia’s lease of naval facilities in Crimea [then part of Ukraine] would be extended by 25 years beyond 2017 - until 2042. The accords also envisioned a $100 discount.

Crimea refused to recognize the legitimacy of authorities propelled to power in Ukraine during a coup that rocked the country in February 2014. The peninsula held a referendum on March 16 and overwhelmingly voted to reunify with Russia, seceding from Ukraine after some 60 years as part of it. Russian President Vladimir Putin signed the accession deal March 18.

The EU obviously wants to prevent developments that took place in late 2008 - early 2009, when a gas dispute between Moscow and Kiev saw Russia cut off gas supplies to Ukraine on January 1, 2009 over unpaid debts. Gas deliveries to European consumers were affected because Ukraine apparently started siphoning off transited gas. The dispute was resolved on January 18, 2009 with a new gas contract that today’s Kiev authorities want revised.

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