Brussels, 03/06/2014 (Agence Europe) - On Monday 2 June, Russia and Ukraine agreed to study a plan enabling Ukrainian gas company Naftogaz to pay back its debt to Russian gas company Gazprom and to secure the supply of Russian gas for Ukraine until June 2015, said European Commissioner for Energy Günther Oettinger on Monday evening.
Ukraine's payment of an initial tranche of US$786 million to settle its arrears for deliveries of Russian gas in February and March has led Russia to postpone until 9 June the move to pre-payment for its gas supplies to Naftogaz. This gesture from Ukraine, of payment of an initial tranche, also enabled the negotiations to be continued with a new trilateral meeting being held in Brussels between Oettinger and the Russian and Ukrainian energy ministers - Alexander Novak and Yuriy Prodan respectively - as well as the CEOs of Gazprom and Naftogaz.
On Monday, “real progress” was made, Oettinger stated at the end of the meeting. The CEOs of Gazprom and Naftogaz and the Russian and Ukrainian governments agreed to study a plan to settle their gas dispute, Oettinger said. “Gazprom and Naftogaz (…) will further consult and continue talks in the next days. Once these talks have led to a consolidated package proposal, both parties will report back to their ministers, with the aim to meet again in the trilateral format without delay”, added Oettinger. Furthermore, “it was agreed that as these talks are ongoing there will be no interruption of delivery, there will be no pre-payment for gas deliveries for June, [and] no party will go to Stockholm for arbitration”, Oettinger stated.
“My request, and what I'm waiting for, is that we might reach a plan that covers the period until June next year”, Oettinger told press. He did not reveal details on the price being considered in the negotiations between Moscow and Kiev, but simply said that it was below the price of US$485 per 1,000m3 demanded by Russia, and above the price of US$268.50 per 1,000m3 sought by Naftogaz.
Ukraine wants a change to the conditions of the 2009 contract that binds it to buy a set volume of gas at US$485 per 1,000m3 - the highest price paid by a European customer. At the end of 2013, Russia reviewed this price down to US$268.50 - before re-establishing it after former pro-Russian president Viktor Yanukovych was deposed. Oettinger is trying to bring the Russian and Ukrainian parties to agree on a median price. The average price paid by European customers to Gazprom is around US$370 per 1,000m3.
Before Ukraine's payment of the initial tranche of US$786 million, its cumulated debt to Gazprom for gas delivered before 1 April was US$2.2 billion. Whilst the dispute continues, Gazprom keeps invoicing Naftogaz at the rate of US$485 per 1,000m3 - which means that, before Kiev's payment at the end of last week, Ukraine's debt - accumulated between 2013 and 2014 - stood at US$3.5 billion. This could mount to US$5.2 billion on 7 June if no payment is made before then.
At the end of the meeting on Monday, Novak stated that Ukraine should pay Gazprom US$1.451 billion for Russian gas consumed between November and December 2013, and begin to pay for the gas imported between April and May “by the end of the week”.
Previously, Gazprom officially notified Naftogaz of its decision to move to a system of pre-payment and sent out an invoice for June. If Ukraine does not settle this bill within the time period provided, Russia could turn off the tap - which would disrupt the transit of Russian gas to Europe.
The EU, which imports 25% of its gas from Russia (nearly half of which transits through Ukraine), does not want to run the risk of another disruption to deliveries of Russian gas - as happened in the Russian-Ukrainian gas disputes in 2006 and 2009. (EH)