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8 Oct, 2009 05:04

Naftogaz and Ukraine skating on thin ice over next Gazprom payment

European power giant GDF says it will increase its gas reserves, after Ukraine admitted it would have trouble paying its next Gazprom bill and fears of another round of gas disputes mount.

Ukraine’s Prime Minister says they scraped together quote "every last penny" on Wednesday to pay Russian gas deliveries for September. The country’s near bankrupt. It survives on IMF handouts.

The firm charged with paying Gazprom is Ukraine energy holding Naftogaz. Much of its leadership was due at the industry's biggest event, the World Gas Conference, but stayed at home to deal with the mess.

Gazprom CEO, Aleksey Miller, says they were noticeable by their absence.

“This morning we toured the conference exhibitions. The Chinese, the Brazilians, were all there, but the Naftogaz stand was empty. All their efforts must be going in to settle their debt.”

Naftogaz Deputy Chairman, Vadim Chuprun, did make the trip. He blames the government in Kiev. Ahead of presidential elections in January, it won't charge voters enough to cover Gazprom. He says the next Gazprom bill will have it looking for cash.

“It's going to be tough to find the money for Russian gas this month. Their price is $200 per thousand cubic meters, we have to sell it on to consumers for $100. From September the first that was due to go up to 120, but the state changed its mind.”

Ukraine transits 80% of Russia’s gas to Europe. When Kiev blocked transit after a similar payment spat last winter, thousands of European families had their heating stopped.

The largest blue fuel supplier in the EU is now preparing for the worst, according to Jean-Francois Cirelli, Chief Operating Officer of GDF Suez.

“Well naturally we want to increase our reserves. It’s very important for consumers to have supplies of gas. We managed to do that over the last year, but it’s not an easy task.”

Gas demand peaks in winter. An ice rink installed by Gazprom’s stand in Buenos Aires is a chilly reminder: get ready for the cold, and the Russia-Ukraine gas war that can come with it.

Gazprom's CEO has been locked in this room all day with European gas leaders. He needs to convince them another winter supply cut will be the fault of Naftogaz. One thing is certain, Russia, Ukraine and Europe are now skating on thin ice.