Tuesday, September 30, 2014

Moscow rejects Kiev's 'virtual' gas price, seeks $3.9bn to resume supplies

Russia is ready to resume gas deliveries to Ukraine only after it pays $2 billion of its debt and makes a $1.9 billion advance payment for future supplies, Russian Minister of Energy Aleksandr Novak said.
There will be no new supplies if part of the debt is not paid. Otherwise, it turns out to be a game with only one goal, where we deliver the gas and the debt payment is postponed," he argued.
Novak said that Ukraine is prepared to pay $3.1 billion of its Russian gas debt.
"They calculated the cost at their own virtual price at $268.5 [per thousand cubic meters of gas]," the Minister said.

However Russia is happy to sell its gas at $385 which amounts to $1.9 billion for the 5 billion cubic meters Ukraine wants to purchase. Together with the debt payment it amounts to $3.9 billion.
Prepayment will likely be made every month, according to the needs of Ukraine. The amount of $3.1 billion has to be paid in two tranches: $2 billion before supplies are resumed, and the remainder - by the end of the year, Novak said.
Russia is ready to fulfill the agreements reached on Friday in Berlin and is waiting for a Ukrainian response, Novak said answering a question concerning the possibility of sealing the deal this week.
All the agreements of the so-called "winter plan" worked out on September 26 were verbal, and the gas price remains an unresolved issue.
The money for this plan has already been provided to Ukraine by the International Monetary Fund (IMF), Novak said.


  • The Ukrainian Energy Ministry said Tuesday it had three reasons to object the “Winter Plan” on gas, endorsed by Russia and the European Commission during the ministerial gas meeting in Berlin last Friday.........

The plan envisages that Kiev repays of $3.1 billion of its gas debt to Russia and pays in advance to Gazprom for the delivery of five billion cubic meters of gas at the price of $385 per 1,000 cubic meters, with a discount of $100. The plan, intended to reduce risks for transit of Europe-bound Russian gas via Ukraine, is to be in place until late March.

Kiev, however, rejects Russia’s offer of the $100 gas-price discount in the form of an export-duty exemption and wants the contract price to be reduced instead.

Ukraine also wants to agree the debt repayment schedule, as well as terms and schedules of future gas deliveries.

Kiev also insists on amending the current gas contract with Russia in order to formally authorize the reverse deliveries of Russian gas to Ukraine from Europe.

Earlier on Tuesday, Russian Energy Minister Alexander Novak said that Russia is ready for the "Winter Plan" of delivering natural gas to Ukraine and is waiting for Kiev's reaction.

Moscow and Kiev have a long history of disputes over natural gas deliveries. In June, Russia's gas giant Gazprom was forced to introduce a prepayment system for gas deliveries to Ukraine due to Kiev's massive debt which is currently estimated at $5.3 billion.

As Ukraine is not only a consumer, but also a major transit country for Russian gas supplies to Europe, the European Union has repeatedly emphasized the importance of trilateral gas talks, the next round of which is scheduled to take place in Berlin on October 2 and 3.

(RIA Novosti)

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