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Gazprom introduces prepayment system for gas supplies to Ukraine

The deadline for Naftogaz of Ukraine's transfer of $1.95 billion payment to Gazprom has expired at 10.00 am Moscow time

MOSCOW, June 16. /ITAR-TASS/. In full compliance with the effective contract, Russia’s Gazprom has introduced pre-payment for gas supplies to Ukraine’s oil and gas company Naftogaz, as follows from the company’s news release.

“The decision is made because of chronic non-payment by Naftogaz of Ukraine. The overdue debt for supplied Russian gas stands at $4.5 billion — $1.5 billion for November-December 2013, and $3 billion for April-May 2014,” the news release says.

The deadline for Naftogaz of Ukraine's transfer of $1.95 billion payment to Gazprom has expired at 10.00 am Moscow time, and no payment was received by the Russian gas company.


Further action on Ukraine's gas debt

The decision on further action regarding Ukraine's gas debt to Russia will be made after Gazprom's CEO Alexei Miller presents a report on the situation to the Russian President Vladimir Putin, Russian Deputy Prime Minister Arkady Dvorkovich said at the World Petroleum Congress on Monday.

Gas to European consumers will be supplied in full, Gazprom's Sergei Kupriyanov said. Taek and pay contract is still effective despite the introduction of prepayment system for Ukraine, Kupriyanov noted.


Reverse gas supplies

Russian gas giant Gazprom may impose restrictions on gas supplies for European companies that will be involved in reverse gas supplies to Ukraine, CEO Alexei Miller told a news conference on June 12.

“The reverse supplies contradict agreements with the European buyers of Russian gas, that is why restrictions may be imposed on them,” he said.

“Reverse supplies are a half-shady mechanism. The gas goes in a circle, but this is Russian gas,” Miller added.


Postponing deadline for gas debt repayment

Russia has postponed the introduction of the prepayment system three times.

June 11 trilateral talks between Russia, Ukraine and the EU on the price of gas ended with no result. Bilateral talks between Gazprom and Ukraine’s Naftogaz yielded no result either on June 15.

Gazprom CEO Alexei Miller said that Naftogaz must pay $1.454 billion for November-December and demonstrate some progress on repaying the debt for April-May supplies. Miller said that during the trilateral talks, the debt increased by $2 billion with the unpaid supplies amounting to 11.150 billion cubic meters.

During the last trilateral talks, Gazprom agreed to recalculate the April-May debt on the basis of a $384.86 price, but Kiev wants the price to be $326 against $268 it demanded earlier before it starts repaying the debt.

Miller said that the $385 price corresponds to the International Monetary Fund recommendations given to Ukraine and that EU Energy Commissioner Gunther Oettinger supports the figure.

The European Commission also backs Russia’s approach that paying the debt is necessary.