Ukrainian Prime Minister orders start of natural gas payments to Russia

Business & Economy October 31, 2014, 17:30

Russia has no guarantees that Ukraine has enough funds to make upfront payments for future Russian gas supplies

KIEV, October 31. /TASS/. Ukrainian Prime Minister Arseniy Yatsenyuk gave instructions on Friday to start payments for the natural gas supplied by Russia .

“In compliance with the three-party protocol signed between Ukraine, the EU and our neighbors [Russia], I instruct the Finance Ministry, the National Bank and Naftogaz of Ukraine to start the procedure of financial payment as part of this protocol,” Yatsenyuk told a meeting of the anti-crisis energy headquarters.

“This refers both to payment for the supplied gas and additional natural gas pumping until the end of the year,” the Ukrainian premier said.

Russian Energy Minister Alexander Novak told a news conference on Friday that Russia has not received any concrete guarantees that Ukraine's Naftogaz Ukrainy has enough funds to make upfront payments for future Russian gas supplies.

“We do not have any concrete guarantees confirming that Ukraine has the money for upfront payments but officials have confirmed that the money will be found,” Novak said, adding the funds were expected to be provided by international financial organizations, the European Union and Naftogaz Ukrainy.

“Ukraine has $3.1 billion on its accounts to repay its outstanding gas debt,” the Russian energy minister went on to say.

Asked about the possibility of direct gas supplies to eastern Ukraine, Novak answered that Naftogaz is the only Russian gas buyer in Ukraine.

Russia-Ukraine interim gas deal

Russia and Ukraine reached an interim gas agreement with the EU’s mediation in Brussels on October 30. EU Energy Commissioner Guenther Oettinger said the deal worth $4.6 billion was the basis for secure energy supplies to Europe in the upcoming winter.

Under the deal, the Ukrainian national energy company Naftogaz undertook to pay $1.4 billion to Gazprom as partial repayment for the natural gas supplied to Ukraine in November-December 2013 and in early 2014. The deal allows Ukraine to purchase natural gas until late March 2015 at a fixed price of $385 per 1,000 cu m, which will cover Ukraine’s requirements for natural gas and ensure stable supplies to Europe.

Ukraine will have to pay another $1.65 billion to Gazprom by the end of this year. Russia will supply natural gas to Ukraine, if Kiev makes advance payments.

Russia, Ukraine, EU hail the gas agreement

EU energy commissioner Guenther Oettinger, who is leaving the office on Friday, hopes that the new agreement on gas will help improve relations between Russia and Ukraine.

Oettinger said the agreement is the basis for ensuring the European Union’s energy security in winter. He also said that a considerable volume of natural gas will be pumped through Ukraine and such countries as the Czech Republic, Romania, Bulgaria and Austria will have sufficient gas volumes in winter.

The leaders of Russia, Germany, France and Ukraine have also welcomed the agreements on conditions of supplies and transit of Russian natural gas to Ukraine, the Kremlin press service announced Friday.

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