Ukraine suggests compromise gas price in row with Russia

As the latest talks hit an impasse, Gazprom set June 16 as the deadline for Ukraine to pay off part of its debt.

Ukraine suggests compromise gas price in row with Russia

World Bulletin/News Desk

Ukraine said on Friday it was ready to pay a compromise price for Russian natural gas for 18 months to avert the threat of Moscow cutting off supplies and allow time to reach a long-term pricing agreement.

Andriy Kobolev, chief executive of state gas company Naftogaz, said the price of $326 per 1,000 cubic metres - higher than what Kiev wants to pay and lower than what Russia demands - was proposed by the European Commission during talks.

In talks that are made even more difficult by the conflict in Ukraine, in which Kiev accuses Moscow of backing a separatist rebellion in eastern regions, Russia has threatened to cut off supplies to Ukraine if it fails to start paying off billions of dollars in debts by Monday.

The Russian Energy Ministry has ruled out holding any more talks with Kiev and the EU before the Monday deadline.

"In our opinion the European Commission has proposed a compromise that is not bad," Kobolev told reporters, suggesting that Kiev should pay this price for an 18-month interim period.

"Ukraine will be ready under such a compromise to pay its unpaid bills from the past," he said.

But adding that he had received offers from European companies to deliver gas at a lower price, he said: "Even so, we believe it is still rather high."

He gave no details of the offers he said he had on his desk.

Russia almost doubled the price to $485 per 1,000 cubic metres after Ukraine's Moscow-leaning president was toppled in February. Ukraine wants Moscow to stick to the price of $268.5 offered after Yanukovich spurned a trade pact with the EU.

Moscow has also offered to cut the price to $385 by eliminating an export duty of $100 per 1,000 cubic metres. This would be around the average price for Russian gas in Europe.

Russia says Ukraine has piled up more than $4 billion in debts to state exporter Gazprom, which also delivers gas to the EU, half of it through pipelines via Ukraine.

Gazprom says Ukraine should pay $1.95 billion of those debts by Monday or face a cut in supplies.

Asked if Kiev would pay by then, Kobolev said: "I am not ready to answer that because there are still five more hours until the end of the day. Anything can happen."

OTHER ROUTES

Russia supplied the EU and Turkey with 162 billion cubic metres (bcm) of gas last year, a record high, meeting around a third of gas demand in Europe. Around half of that went through Ukraine.

Russia's onward gas supplies to Europe through Ukraine were interrupted during the winters of 2006 and 2009 because of pricing spats with Kiev.

Miller said on Thursday Gazprom might boost gas supplies to Europe via other routes, including the Nord Stream pipeline through the Baltic Sea.

"We will do everything to provide uninterrupted gas supplies to European consumers," he said.

However, Russia's ability to ship gas via Nord Stream is limited because of EU regulations, which require third-parties to also be given access to pipelines.

Russia built Nord Stream with a capacity of 55 bcm a year to bypass transit countries, such as Ukraine. It plans to construct a South Stream pipeline on the bed of the Black Sea to Bulgaria and further up to Austria.

The European Commission has asked Sofia to suspend work on South Stream pending a decision on whether the project complies with EU law. Separately, Washington has warned that Bulgarian companies working on the project could be hit by sanctions.

Miller said Bulgaria had not notified Gazprom of any suspension of work on construction of the South Stream still under way.

Last Mod: 13 Haziran 2014, 13:53
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