Official: Gazprom may cut price to $380 if Kiev repays debt

Russian gas giant Gazprom may reduce the price for Ukraine to U.S. $380 for 1,000 cubic meters from almost $500 if Kiev repays its debt, Ivan Grachov, chairman of the energy committee of the State Duma, the lower chamber of parliament, told PRIME Friday.

“The first cancelled discount was indisputable, but the discount was provided for perfect payment practices. Any court will recognize the reason why it has gone,” Grachov said.

“The second discount, granted for the fleet deployment in Crimea, was complex and ambiguous because it was separated from the main contact. There will be long, large litigations if lawyers start to discuss this discount. This is why we said that we, together with Europe, will start to discuss the discount in detail if Ukraine repays the part of its debt, which is not doubted. If all requirements are met, then, I think, the price will be close to the European one, it will stand at about $380.”

Energy Minister Alexander Novak said earlier that Moscow may grant some discount to Kiev once it starts repaying its U.S. $5.2 billion debt but conditions of a contract signed in 2009 will not be revised.

Kiev has long been seeking a revision of this 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.

Source: PRIME, 2014

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