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11 Feb, 2008 16:36

Deadline for payment of Ukraine gas bill put back

Gazprom has pushed back a deadline to cut off gas to Ukraine as officials from both sides continue talks on payment issues. The new deadline is set for 6 pm on Tuesday, Moscow time. This follows a day of talks between executives of Russian and Ukranian ga

The current row is far from being the first one in the turbulent energy relationship between Russia and Ukraine.

On New Year’s Day 2006 Gazprom stopped its gas supplies to Ukraine following a months-long dispute. For some years Russia’s ex-Soviet neighbour had been acquiring Russian gas at a price almost five times lower than Europe.

In March 2005 Ukraine proposed a transition to market relations with Russia cancelling earlier agreements for Russian gas transportation. In return, Gazprom announced new market prices for Ukraine, which it refused to pay. After months of deadlock and clear notice the country was cut off.

At the same time European gas supplies surprisingly turned out to be disrupted as well.

A compromise deal was reached four days after the cut-off with both sides agreeing to stick to market prices in their gas relations.

Under the new agreement Ukraine bought natural gas from a middleman company RosUkrEnergo. This company acquired Russian gas for $US 230 per thousand cubic metres, mixing it with gas from central Asian republics and selling it to Ukraine for $US 95.

But last October Gazprom issued another warning over a $US 1.3 billion debt for the gas used by Ukraine  in 2007. Back then Kiev hurriedly handed over the required sum. Now it owes $US 1.5 billion more.

According to Gazprom, before the talks with the Ukrainians the company had no idea who would pay for the gas delivered to Ukraine since the beginning of the year.

“Taking into consideration that we do not have any signed documents and everything goes through RosUkrEnergo we cannot fulfill our duties before Gazprom. We simply don’t have any contract on gas deliveries or payments for gas,” said Ukraine’s Prime Minister Yulia Timoshenko.

At least for her everything is clear. She blames the previous government headed by Viktor Yanukovich and former Energy Minister Yury Boiko.

“As the Yanukovich government and Boiko left this debt, I believe Boiko, who now represents RosUkrEnergo, must do all he can so this debt can be restructured over a long period of time. Ukraine will not pay this debt at one go,” Timoshenko stated.

She urged Moscow to abandon intermediaries and sign a direct deal between Gazprom and Naftogaz. She plans to bring it up during her next visit to Moscow.

But as Gazprom spokesperson Sergey Kupriyanov said, “before we start talking about new schemes, we should fill in all the holes in the old ones, to get all the old debts paid”.

Many hope the visit of the Ukrainian president to Moscow on Tuesday will get the talks moving. Although both sides insist the matter is not political.

Russia is stressing that there'll be no repeat of previous problems: Gazprom may turn off taps to Ukraine but this will have no consequences for European consumers.