Brussels, Kyiv diverge on gas talks results

Yuriy Prodan. Photo Georgi Gotev

Yuri Prodan [Georgi Gotev]

Ukraine’s state gas company, Naftogaz, said Tuesday (27 May) that no real progress was made with Russia’s Gazprom over its gas debt, and on pricing, in talks in Berlin, aimed at settling a dispute that threatens to disrupt gas flows to western Europe.

The statement seemed at odds with the EU’s energy commissioner, who said Ukraine and Russia had made progress on price yesterday and his proposal for Ukraine to pay $2 billion of its debts by Thursday could pave the way for talks on Friday [read the Commission statement here].

Speaking after three-way talks with Russia’s and Ukraine’s energy ministers in Berlin, Günther Oettinger said the two governments would study his proposal that Ukraine pay Russia $2 billion by Thursday and a further $500 million by 7 June.

But Naftogaz said Russia had stuck to an “unconstructive” position, demanding that Kyiv should pay all its bills, including ones that the gas company considers to be debatable.

“Naftogaz […] regrets the lack of real progress in negotiations with Gazprom,” it said in a statement.

Naftogaz said it was ready to pay bills if “a civilised compromise” was found to ensure gas flows to Ukraine.

Ukrainian Energy Minister Yuri Prodan said yesterday there was no final agreement after the Berlin talks and he would not confirm that Ukraine had agreed to pay $2 billion on Thursday. He said the two sides have until Wednesday night to decide.

Ukraine wants to change the conditions of a 2009 contract that locked Kyiv into buying a set volume of gas, whether it needs it or not, at $485 per 1,000 cubic metres – the highest price paid by any client in Europe.

Moscow dropped the price to $268.50 after then-President Viktor Yanukovich turned his back on a trade and association agreement with the European Union last year, but reinstated the original price after he was ousted in February.

Ukraine insists on a price of $268.50 per 1,000 cubic meters while Russia stands by its demand for $485. Oettinger is trying to get the two sides to agree in the middle.

Gazprom CEO Alexei Miller told Rossiya-24 television late yesterday the company was ready to provide a discount on the gas price for Ukraine but only after Kyiv paid at least part of its debt.

Moscow says Ukraine’s total gas debt stands at $3.5 billion and will switch to pre-payment for June, promising to deliver as much gas as it was paid for. Russian Energy Minister Alexander Novak said last week Ukraine had yet to pay. 

Russia’s gas export monopoly Gazprom sells its gas to EU clients under secretive bilateral deals.

An illustration on how Gazprom uses the price of gas as a political weapon was provided in the context of the unfolding Ukraine crisis.

Ukraine was paying Gazprom a price of $400 per thousand cubic metres (tcm)under an agreement signed under former Prime Minister Yulia Tymoshenko, back in 2009.

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