OAO Gazprom (OGZD), Russia’s state gas exporter, presented Ukraine with an
additional $11.4 billion bill for fuel it promised to buy last year, increasing
pressure on the government in Kiev as the prospect of supply cuts looms.
Gazprom sent the document to NAK Naftogaz Ukrainy yesterday, Gazprom
spokesman Sergei Kupriyanov said today by phone in Moscow. According to the
terms of a 2009 contract, Ukraine owes a total of $18.4 billion under
take-or-pay clauses, where customers must pay for gas whether they use it or
not, President Vladimir Putin said earlier this month.
Ukrainian Energy Minister Yuri Prodan said that he considers Gazprom’s
demands "unjustified” and Ukraine is ready to fight them in court. Ukraine
informed the Russian state gas exporter "in time” about its gas requirements,
he told reporters in Bratislava, Slovakia.
Ukraine, which is getting an international bailout to stave off default,
met European Union and Slovakian officials today to discuss buying more gas
from the rest of the continent. Ukraine gets about half its gas from Russia,
making energy a central issue as tensions with Russia rise.
"Russia is clearly whipping up tension before Ukraine’s talks with Europe,
understanding that Naftogaz won’t pay,” Bohdan Sokolovskyi, an energy adviser
to former Ukrainian President Viktor Yushchenko, said by phone. "Under the
contract, Gazprom truly has the right to demand $11.4 billion. The other issue
is the contract was unfair.”
Reverse Gas
The EU, Slovakia and Ukraine failed today to agree on flows from the west,
aimed at reducing Kiev’s dependence on Russian gas. Ukraine aims to use
EU-bound pipelines in a so-called reverse mode to supply its domestic needs.
"We support Ukraine in solving certain issues Ukraine has with the Russian
Federation and Gazprom, with a goal of reaching fair market prices, with a goal
to pay justified invoices within the coming weeks and with a goal of rejecting
unjustified invoices,” EU Energy Commissioner Guenther Oettinger told reporters
in Bratislava.
The bill is in line with the contract and Gazprom is entitled to seek some
of the $18.4 billion mentioned by Putin, Kremlin spokesman Dmitry Peskov said
today.
Today’s talks didn’t include Russian representatives. No date or venue for
negotiations with Russia have been set, Sabine Berger, a spokeswoman for
Oettinger, said today. There have been contacts on possible talks, Peskov said.
Pricing Dispute
Gazprom and Naftogaz signed the 2009 gas supply agreement to end a pricing
dispute that had led Russia to halt deliveries to Ukraine, which disrupted
transit flows to Europe for about two weeks during freezing weather.
Naftogaz was obliged to buy at least 41.6 billion cubic meters of Russian
gas last year under the contract, whether or not they took the volumes,
according to Gazprom. Naftogaz imported 12.9 billion cubic meters of the fuel,
Aliona Osmolovska, a spokeswoman for the Ukrainian company, said by phone from
Kiev, declining to comment on the bill. Gazprom supplied 25.8 billion cubic
meters of gas to Ukraine last year in total, including Naftogaz and private
Ukrainian companies.
"We’ve never paid for not purchasing gas in the required volume,” former
Ukrainian Deputy Prime Minister Yuriy Boiko said today in Kiev, according to
Interfax. "We warned Russian partners at that time that we’d pump as much gas
as the country needs.”
Discounts Ended
In January 2013, Gazprom charged Ukraine $7 billion for fuel that Naftogaz
had to pay for under a take-or-pay clause in 2012. The bill wasn’t paid, and
Ukraine won a discount on gas prices in December, a month after then-President
Viktor Yanukovych pulled out of a European Union cooperation accord, favoring
ties with Russia. Yanukovych’s decision kicked off protests that led to his
downfall this year, souring Ukraine-Russia relations.
The government in Moscow canceled all gas discounts this month, increasing
Ukraine’s fuel price 81 percent, to a level higher than for any European
nation.
Russia has provided Ukraine’s economy with $35.4 billion of subsidies in
the past four years, including $17 billion in gas-price discounts and $18.4
billion in the form of a take-or-pay fines it hasn’t enforced, Putin wrote
April 10 in a letter to 18 European heads.
Before today, Russia had been pressuring Ukraine to settle its more than
$2.2 billion debt for imported gas last year and in the first quarter of 2014.
Gazprom will demand Ukraine pay in advance for natural gas deliveries in a
month unless its neighbor resumes payments, a move that may lead to disruptions
in fuel supplies to Europe, Putin said in a televised call-in show on April 17.
(Bloomberg)