Ukraine, Russia Partly Agree On Gas Debt

Ukraine has agreed to pay off part of its gas debt to Russia, but the two countries still need to settle on payments until year-end to avoid a repeat of 2006's gas supply interruptions, representatives from Russia's and Ukraine's state gas firms said Tuesday.
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Τρι, 25 Νοεμβρίου 2008 - 20:13
Ukraine has agreed to pay off part of its gas debt to Russia, but the two countries still need to settle on payments until year-end to avoid a repeat of 2006's gas supply interruptions, representatives from Russia's and Ukraine's state gas firms said Tuesday.

At a meeting in Moscow Tuesday between head of Russia's state-controlled gas company OAO Gazprom (GAZP.RS), Alexei Miller, and head of Ukraine's state gas company Naftogaz, Oleg Dubina, Ukraine agreed to pay of its gas debt for September and "part of the debt for gas delivered in October," Gazprom said.

Moscow warned Saturday it would cut off gas deliveries to Ukraine Jan. 1 unless a new contract is signed, in a move that would risk a repeat of 2006's interruptions to gas supplies to Europe.

But that "worst-case scenario" is still a possibility even after Tuesday's agreement, if Moscow and Kiev don't agree terms on payments for gas deliveries for November and December, a Gazprom spokesman said.

Talks on a long-term gas supply deal will be resumed as soon as Ukraine repays its debt in full, Gazprom said. The two countries signed a memorandum of understanding on Oct. 2 about direct sales of gas without middlemen.

"We expect to agree on a supply deal without middlemen by Jan. 1," a Naftogaz spokesman said. But until the parties agree terms on payment for deliveries for November and December "anything can happen," he added.

Gazprom is insisting that a new contract for gas deliveries to Ukraine can only be signed once the issue of Ukraine's gas debts is fully resolved.

Russia says Naftogaz owes Gazprom $2.4 billion for gas deliveries in September, October and November. Although Kiev earlier disputed the amount, the Ukrainian gas firm agreed to pay part of this debt.

Gazprom has said that the price Ukraine pays for gas could increase to $400 per 1,000 cubic meters from the current $179.50. Ukraine has said payments had been held up by the global economic crisis.

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