Tuesday, April 08, 2014

Ukraine plans to pay Russia for gas after price reduction

Ukraine’s parliament-appointed Minister of Economy and Trade Pavel Sheremeta told a briefing on Tuesday that Ukraine would pay for the consumed Russian gas after it agreed on the final price with Russia.

"Ukraine will pay for the consumed gas when it resolves strategic issues, including gas prices," Sheremeta said.

Asked when Ukraine was going to pay for the gas consumed in March, Yuriy Prodan, Ukraine’s parliament-appointed minister of energy and coal industry, dodged the question.

"Payments for March? The settlement period is just starting," Prodan told a news conference in Brussels on April 8.

  • "Naftogaz Ukraine" has not transferred anything for the Russian gas consumed in March, a Gazprom source told , adding the deadline expired on April 7, TASS reports.

Gazprom’s Chief Alexei Miller said on April 3 that Ukraine’s debt to Russian gas companies had run up to $2.2 billion. The debt was valued at $1.7 billion on April 1.

Russia slashed the natural gas price for Ukraine to $268.5 from nearly $400 per 1,000 cubic meters after the association deal with the EU was shelved last year.

The price for Russian gas for Ukraine in the second quarter was set at $385.5 per 1,000 cubic meters. Russian state energy giant Gazprom said earlier that the price rose due to the return to earlier contract agreements, as Ukraine failed to fulfill its commitments under an additional agreement concluded in December 2013, which obliged the country to pay for supplied volumes of Russian gas in time.

On April 2, Putin signed a law on denunciation of the Kharkiv Accords with Ukraine, which were struck in 2010 and stipulated that Russia’s lease of naval facilities in Crimea (then part of Ukraine) will be extended by 25 years beyond 2017 - until 2042.

The Kharkiv deals envisioned a discount of $100 per 1,000 cubic meters on Russian gas for Kiev. Now that the accords have been denounced due to Crimea’s accession to the Russian Federation, the discount will no longer be applied, raising the gas price by another $100 to $485.5 per 1,000 cubic meters.

Commenting on gas price rise for Ukraine, Yuriy Prodan described the new price as "excessively high", saying that under the current circumstances it would be more expedient for Ukraine to import gas from Europe.



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