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30 May, 2014 15:20

Naftogaz transfers $786mn of gas debt to Russia

Naftogaz transfers $786mn of gas debt to Russia

Ukraine has transferred $786 million of its $3.5 billion gas debt to Russia, Ukraine’s coup-appointed Prime Minister Arseniy Yatsenyuk said in Berlin on Friday.

Ukraine’s coup-appointed Prime Minister Arseniy Yatsenyuk said Ukraine closed all of its “indisputable” gas bills for Russian gas supplied in February and March.

“We paid for the gas that was priced at $268 per 1,000 cubic meters…These are indisputable bills in our relations with Gazprom. Overall, there’s $786 million in such bills,” he said, as Russia, Ukraine and the EU are holding a third round of energy talks in Berlin.

Ukraine will never pay for Russian gas at a price of almost $500 per 1,000 cubic meters, Yatsenyuk added.

He also added Kiev was ready to go to the Stockholm Arbitration Court if gas negotiations on June 2 fail.

However, Russia’s energy minister, Aleksandr Novak, said that Gazprom hadn’t received any money transfers from Ukraine’s Naftogaz by the end of the day on May 30.

As far as Moscow is concerned, Ukraine has failed to fulfill its obligations from May 26 to repay its gas debt to Russia, the minister stressed.

Therefore, the possible introduction of a pre-payment system in Russian-Ukrainian gas relations isn’t off the table yet, he added.

Russian Energy Minister Alexander Novak speaks during a news conference after EU-Ukraine-Russia energy negotiations at the EU commission representation in Berlin May 30, 2014. (Reuters/Thomas Peter)

According to Novak, Russia is also seriously concerned about the financial aspect of the crisis in Ukraine and Kiev's inability to pay for the gas it receives.

“As part of our consultations, we discussed the issue of providing financial assistance to Ukraine by EU and international credit institutions,”
he said.

“Such failures to pay don't lead to an increase of trust between partners,” the minister said, urging Kiev to “at least that the part of the debt, which isn’t disputed by the Ukrainian side."

Instead of threatening Moscow with judicial proceedings, Ukraine should focus on repaying its existing debt to Russia, Natalya Timakova, the press secretary for Russia’s prime minister, said.

“If the debt is not paid on time, we won’t be talking about the prospect of lawsuits, but about a practical transition to a system of advance payment for gas,” she explained.

Earlier in May, the head of Russia’s Gazprom said that Moscow will cut supplies to Kiev already on June 3 if they don’t pay its debt to Russia.

However, talking from Berlin, Russia’s Prime Minister Dmitry Medvedev said that if Gazprom receives the money, they will examine the nature of the funds, and after that the situation may change.

“First we need to make sure they [Ukraine] want to pay. Any other way of posing the question is impossible. When I hear people saying ‘give us another price and then we’ll pay’… that’s rudeness,” Medvedev said.

European Energy Commissioner Gunther Oettinger said Ukraine has enough money to pay for Russian gas.

European Energy Commissioner Guenther Oettinger speaks during a news conference after EU-Ukraine-Russia energy negotiations at the EU commission representation in Berlin May 30, 2014. (Reuters/Thomas Peter)

On Monday, Ukraine and Russia will hold a new round of talks that will result in either a new gas agreement or Ukraine’s application to international arbitration, Yatsenyuk said.

The previous trilateral talks on May 26 resulted in a compromise agreement under which Naftogaz should have paid $2 billion to Gazprom, and another $500 million no later than June 7.

Previously, Yatsenyuk said that Ukraine wants Gazprom to sign an additional agreement that will establish the price of gas at $268.5 dollars per 1,000 cubic meters as it was defined in the first quarter of 2014.

If the two sides were to sign such an agreement, Kiev would repay the whole of its gas debt to Russia within 10 days, he added.

Meanwhile, Kiev wants to receive a cheaper price from Europe in a scheme called reverse gas. The general director of Russia’s National Energy Security Fund, Konstantin Simonov, explained the idea - and its shortcomings - to RT.

“It’s a very popular theory in Ukraine that reverse gas flows can save and protect Ukraine from the consumption of Russian gas, but really it’s a problematic story,” Simonov said.

“In reverse scheme, European companies must sell gas to Ukraine, but Ukraine isn’t ready to pay – to Russians, to Europeans, Ukraine is not ready to pay for gas. It means that very soon there will be a serious debt not to Gazprom, but to European companies, and these European companies will stop exporting gas to Ukraine.