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Ukrainian Naftogaz debt to Gazprom at $5.3 billion

Gazprom cut off natural gas supplies to Ukraine from June 16, 2014 over its gas debt as Kiev refuses to pay for Russian natural gas at $485 per 1,000 cu m

MOSCOW, September 16. /ITAR-TASS/. The Ukrainian national energy company Naftogaz owes Gazprom $5.3 billion for natural gas supplies, the Russian gas giant said on Tuesday.

“The prospects of future relations between the companies (Gazprom and Naftogaz) fully depend on solving the issue of gas debt repayment,” Gazprom said in a statement.

Gazprom cut off natural gas supplies to Ukraine from June 16, 2014 over its gas debt as Kiev refuses to pay for Russian natural gas at $485 per 1,000 cu m.

Russia raised the gas price for Ukraine from $268.5 to $485.5 per 1,000 cubic meters from April 2014. Ukraine said it will not pay for Russian natural gas supplies at such a high price.

After Russia and Ukraine failed to reach a compromise on the gas issue, Naftogaz and Gazprom filed mutual claims to the Stockholm Arbitration Tribunal.

The gas price for Ukraine has increased, in particular, by $100 per 1,000 cubic meters since April 1, 2014 after Russia denounced the 2010 Kharkiv accords on extending the lease of the Russian Black Sea Fleet’s base in Crimea in exchange for a gas price discount. The accords were denounced after the Black Sea peninsula joined Russia in the spring of 2014.

Russia also offered Kiev the second discount as part of an anti-crisis aid package for Ukraine in November 2013 but scrapped it from April 1, 2014 over Ukraine’s failure to repay its debts for Russian natural gas supplies.

The Gazprom Board of Directors also discussed on Tuesday Russian natural gas supplies to European consumers via Ukraine in the upcoming autumn and winter period, the gas giant’s statement said.

“The board meeting participants stressed that the reliability of these supplies can be ensured only if Naftogaz of Ukraine strictly complies with the transit contract,” the statement said.

The Gazprom Board of Directors instructed the company’s management board to continue work under the contracts signed between the Russian energy giant and Naftogaz “on the volumes and the terms of gas transit across Ukraine and the purchase/sale of natural gas, including the settlement of the gas debt by the Ukrainian company for gas supplies,” the statement said.

Gazprom’s management board has also been instructed to minimize the risks of interruptions in gas transit to European consumers in the autumn-winter period of 2014-2015, the gas monopoly said.

Naftogaz stopped paying for Russian natural gas supplies on March 25, 2014.

Naftogaz’s gas debt to Gazprom, excluding the debt under the “take or pay” clause, totaled about $5.296 billion as of August 1, 2014, including $1.451 billion for November-December 2013 and about $3.845 billion for April-June 2014.