Minister: Moscow, Kiev gas talks fail, to continue negotiations

Moscow and Kiev have not reached an agreement on a gas price on Wednesday and the negotiations will continue, Russian Energy Minister Alexander Novak said after a trilateral meeting between the countries and the E.U.

The 2009-2019 contract with the price of U.S. $385 per 1,000 cubic meters, which includes a $100 discount, is still in force, Novak said. “Russia is ready to guarantee a 1-year discount of $100 per 1,000 cubic meters to Ukraine by an additional contract,” he said.

Ukraine’s Energy Minister Yury Prodan rejected the conditions saying this price is nothing more than a “political fixing of the price.” He said the country has reverse gas supplies offers at a price much lower than $385 per 1,000 cubic meters and is waiting for Gazprom to offer the best price.

Russian President Vladimir Putin told a government meeting that Kiev is intentionally pushing the gas price talks to a deadlock by demanding to set the price before it pays its debt. “By all accounts, the matter is intentionally led to a dead end,” Putin said, adding that “Ukrainian partners are not satisfied with the discounts, they want more, but the basis of their demands is not clear.”

E.U. Energy Commissioner Gunther Oettinger earlier said that the $100 discount must become the basis of a new price, but after the talks failed suggested Russia provide additional discounts.

The countries must reach an agreement on the price and amount of supplies for the next 12-15 months within days, and each side must make its own concessions, Oettinger said, adding that the European Commission expects a definite success in the next 48 hours.

Russia also suggested revising Kiev’s $2.353 billion debt for April-May supplies. It must be repaid before June 26, Novak said, explaining that the first $500 million tranche must be transferred before June 16 and $1.8 billion by June 26.

Gazprom will switch Ukraine to a prepayment system if the first tranche of the debt and a $1.451 billion debt for the gas supplied in November-December 2013 is not transferred by 9:00 on June 16.

Ukraine has “the only way to settle the gas price ­– by appealing to the Stockholm arbitration court,” Prodan said. “We do not agree that even the slightest part of the price is regulated by the government. We want to change the whole pricing mechanism,” he said, adding that “flawless gas flows to the E.U. are in the hands of the Russian side.”

Kiev will not file a suit to the arbitration before June 16, Prodan said. “We still have time until Monday to solve the problem.”

Ukraine is ready to continue the talks “along with waiting for the Stockholm arbitration court’s ruling,” Prodan said.

“Russia is ready to meet any moment,” Novak said.

Source: PRIME, 2014

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