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Russia ready for price concessions to Ukraine, but demands gas debt repaid before June 9

Russian energy giant Gazprom will not sue Ukraine’s Naftogaz at the Stockholm international arbitration court before June 9
Gazprom CEO Alexei Miller ITAR-TASS/Mikhail Klimentyev
Gazprom CEO Alexei Miller
© ITAR-TASS/Mikhail Klimentyev

MOSCOW, June 02. /ITAR-TASS/. Ahead of Russia-Ukraine-EU tripartite gas talks that will open in Belgium’s capital, Brussels, on Monday, Russia is prepared to go into additional gas price concessions for Ukraine, particularly not to file a lawsuit to Stockholm international arbitration court, possibly reduce the gas price and delay a deadline of introducing advance payment for gas supplies.

However, Ukraine should pay the remaining part of $2.2 billion before June 9 and should agree on gas debt payment schedule made after April 1, 2014, the Energy Ministry said. So, Ukraine’s Naftogaz should pay $1.45 billion before the start of next week.

The first tranche opens up an opportunity for talks on the whole scope of issues. Russia, the European Commission and Ukraine will continue consultations on the issue soon,” the Energy Ministry said.

Russian energy giant Gazprom will not sue Ukraine’s Naftogaz at the Stockholm international arbitration court before June 9, Gazprom CEO Alexei Miller told reporters. “Along with the decision to delay introduction of advance payment to June 9, Gazprom decided not to sue Ukraine’s Naftogaz at Stockholm international arbitration court for this period of time,” he said.

“Ukraine has paid the first tranche for gas supplies. Today, $786 million were transferred to Gazprom. We welcome that Ukraine had started gas debt repayment and delay introduction of advance payment to June 9. Introduction of advance payment scheme will depend on whether the country repays full debt of $2.237 billion for gas supplied before April 1, some part of debt is reimbursed today, and on progress in payments for gas delivery in April and May. Payment for May gas supplies should be made before June 9,” he said.

In his words, if Ukrainian gas debt is settled, Russia is prepared to consider a scheme of resolving the price issue not only through a lower export customs duty, but also “in direct commercial talks on a corporative basis.”


Gas dispute between Ukraine and Russia

Russia has received $786.4 million from Ukraine as repayment of gas debt for February-March 2014, ITAR-TASS reported earlier in the day.

The Energy Ministry noted that two money transfers had been made as payment for gas supplies in February and March 2014.

Gazprom stated earlier that, if before the end of June 2 advance payment was not transferred to the monopoly’s accounts for June gas supplies, the Russian company would restrict gas supplies to Ukraine starting from June 3. Now introduction of advance payment is delayed for a week.

Energy Minister Alexander Novak said earlier that Russia was prepared to reduce the gas price for Ukraine within the export duty size, if the country repays its amassed debts. The gas export customs duty makes $100 for 1,000 cubic meters and was levied earlier (before Crimea’s accession to Russia) under the Kharkiv accords that offered the zero export customs duty as advance payments for basing of the Russian Black Sea Fleet in the Crimean federal city of Sevastopol after 2017.

Without the export duty, the gas price for Ukraine makes $385.5 per 1,000 cubic meters.

The start of commercial talks between Gazprom and Naftogaz means possible further gas price reduction for Ukraine. EU Energy Commissioner Gunther Oettinger stated earlier that a fair price for Ukraine was within a range of $350-380 per 1,000 cubic meters. Ukraine insists on the gas price of $268.5 per 1,000 cubic meters.

In the first quarter of 2014, the Russian average gas price for Europe has made $390 per 1,000 cubic meters.