EU, Russia, Ukraine to meet to discuss gas debt

Russian Energy Minister Alexander Novak, Ukrainian Energy Minister Yury Prodan and E.U. Energy commissioner Gunther Oettinger will meet on Monday, the deadline gas giant Gazprom has set for Kiev as a deadline for an advanced payment for June supplies, to discuss the gas debt and discounts.

“The European Commission believes it necessary to use all the possibilities to reach a mutually acceptable compromise. Russia and Ukraine must try to find at least an intermediate solution to prevent interruption in gas supplies,” an European Commission official said.

Ukrainian Prime Minister Arseny Yatsenyuk said that Monday’s talks will end either with the signing of a Russia-Ukrainian deal or by Kiev filing a suit to a Stockholm arbitration court.

On Friday, Ukraine said it paid U.S. $786 million, which Prodan said Kiev does not doubt as debt. Ukraine calculated the debt at $268.5 per 1,000 cubic meters of gas.

Kiev has long been seeking a revision of s 2009 contract, under which it is to buy a set volume of gas, whether it needs it or not, at Europe’s highest price of $485 per 1,000 cubic meters.

Moscow dropped the price to $268.50 after Ukraine’s then-President Viktor Yanukovich turned his back on a trade and association agreement with the European Union last year, but reinstated the original price after he was ousted in February.

Gazprom says Ukraine owes it over $3.5 billion, and has threatened to stop supplying the neighboring former Soviet republic with gas if it fails to make a pre-payment for June supplies.

CEO Alexei Miller has said that Gazprom is not ready to discuss a discount in the current circumstances, while Novak said Russia has not yet received even the $786 million payment.

Oettinger indicated that the European Commission may support Ukraine’s discount demands but not before Ukraine repays the debt.

Prodan also said that Ukraine is preparing a suit worth “hundreds of billion dollars” against Russia’s annexation of Crimea from Ukraine in March.

“It is part of a larger suit which Ukraine is preparing against Russia,” he said.

Source: PRIME, 2014

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