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Gazprom says Ukrainian debt situation cannot last forever

April 05, 2014, 19:15 UTC+3 MOSCOW
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MOSCOW, April 05 /ITAR-TASS/. The Ukrainian gas debt situation cannot last forever and needs to be resolved, Gazprom CEO Alexei Miller said on Saturday, April 5.

“The debt situation cannot continue endlessly. We cannot supply gas for free. The debt must be paid. And current deliveries must be paid in full, too” he said.

Miler stressed that the debt was growing by the month and now only 20 percent of payments were collected, compared to about 50 percent just recently.

As a result, “Ukraine’s debt to Russia will grow by 5.6 billion U.S. dollars by the end of the year. This is a huge amount of money. This is a very tangible negative result for Gazprom,” he said, adding that this money was already included in the company’s investment plans and budget.

Miller noted that the persons who were insisting on the revision of the gas contracts with Russia had helped to draft them in the past. “The most interesting part is that the people who have come to power [in Ukraine] took part in the drafting and signing of the contracts that are now in effect. Specifically these are Fuel and Coal Industry Minister Yuri Prodan who was a member of the delegation led by [then Prime Minister] Yulia Timoshenko, and the new Naftogaz Ukrainy CEO who was appointed several days ago. In 2009, he worked in Naftogaz Ukrainy in a less senior position but he, too, was directly involved in the preparation of these contracts,” Miller said.

He stressed that Arseny Yatsenyuk, parliament-appointed Prime Minister who was a presidential candidate in 2009, was well aware of what the Timoshenko government was doing and how.

Yatsenyuk said this week that Russia’s decision to abolish the zero export duty on gas for Ukraine was “politically motivated” and “absolutely unacceptable”.

He did not specify, though, what he meant exactly but said “we expect Russia to continue to exert pressure on the ‘gas front’, including by limiting gas supplies to Ukraine”.

Russian Prime Minister Dmitry Medvedev signed a resolution cancelling the zero export duty on natural gas for Ukraine. The resolution will enter into force 30 days after official publication and will apply to relations that arose from April 2, 2014.

The abolition of the zero duty will automatically raise the price of gas for Ukraine from April 2014 to 485 U.S. dollars per 1,000 cubic metres, an increase of more than 200 U.S. dollars from the price that was used until now.

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

In March, Russia supplied 1,956 million cubic metres of gas to Ukraine and “has not received a kopeck” for it so far. “The debt has increased and exceeded 2.2 billion U.S. dollars. The situation is not improving. It is actually getting worse,” Miller said.

The new rise in the price of gas by another 100 U.S. dollars to 485.5 U.S. dollars per 1,000 cubic metres announced on April 3 is a result of the abolition of the zero export duty on gas for Ukraine.

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