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Prior to the talks today EU Energy Commissioner Guenther Oettinger held bilateral talks first with Ukrainian Energy Minister Yury Prodan and then with Russian Energy Minister Alexander Novak.
After the talks with Oettinger on Wednesday Novak told journalists that “We are set to finally agree and sign all documents today.”
The previous three-party gas meeting in Brussels on October 21 once again ended without the expected result as no sources of financing for the repayment of Kiev’s debt were found.
Ukraine’s failure to repay its debt for already supplied gas is the key obstacle to a temporary gas deal with Russia, Oettinger said after the three-party talks.
Ukraine has not paid for the natural gas supplied by Russia for seven months, the EU energy commissioner said.
Russian Energy Minister Alexander Novak said after the latest gas talks that the European Commission had not yet found the financing sources for Ukraine’s gas repayment.
“We believe that possible sources include guarantees by top-class European banks, bridge loans and funds from the EBRD or the European Commission,” the Russian energy minister said.
The European Commission believes that funds, which the Ukrainian national energy company Naftogaz is receiving for the transit of Russian natural gas via its territory, can be used to pay for interim gas supplies to Ukraine, Oettinger said.
However, Russian Energy Minister Novak has said an interim gas agreement between Russia and Ukraine does not stipulate a possibility for using Gazprom’s gas transit payments as an offset for Ukraine’s gas debt.
As an alternative, the EU believes that some European company could become an intermediary in Russian natural gas supplies to Ukraine.If Naftogaz fails to pay, some European company could purchase Russian natural gas and subsequently resell it, Oettinger said.
Ukraine annually consumes about 40-45 billion cu m of natural gas, with more than half of this amount earlier purchased from the Russian gas monopoly Gazprom.
Russian Energy Minister Novak has said Ukraine’s gas debt to Gazprom stands at $5.3 billion, of which $1.4 billion should be repaid by late October and $3.1 billion by the end of the year.
Therefore, Kiev and the EU need to find a source before the October 29 three-party meeting for Ukraine’s gas debt repayment to secure an interim gas deal for winter.
Kiev has requested an additional 2 billion euros in financial aid from the European Union, part of which can be used to repay its gas debt.