Russia to Ukraine: Pay off gas debt to resume negotiations

After Russia cut off gas for Ukraine, Russia says it won't negotiate with Ukraine until the country pays off its gas debt. Ukraine’s parliament is considering legislation that would allow its gas transit and storage facilities to be leased as joint ventures with the US or EU member countries.

By , OilPrice.com

  • close
    Ukraine's Prime Minister Arseny Yatseniuk speaks to deputies of the parliament in Kiev last week. Russia says it won't negotiate with Ukraine until the country pays off its gas debt.
    View Caption

Since June 16, Ukraine has received no gas from Russia because it missed a deadline for paying off nearly half its debt of more than $4 billion it owes for previous gas deliveries. Now it won’t even be able to talk to Russia about how to resolve the problem.

“Neither the situation nor the Russian position has changed during these days [since the gas cutoff],” Energy Minister Alexander Novak said June 19 in Moscow. “We are waiting for the payment for Russian gas.” Russia’s deliveries of gas to Europe through Ukraine have so far not been affected. Once that debt is paid, Novak said, Russia would be ready to resume negotiations. Still, Novak says he personally has seen no guarantee that Ukraine is ready to pay the arrears.

Ukraine’s gas company, Naftogaz, owes its Russian-owned counterpart, Gazprom, an estimated $4.46 billion for previous deliveries of gas. On June 16, Naftogaz missed a deadline to pay nearly $2 billion of that debt, prompting the cutoff.

Recommended: Six ways fleet operators save on gas (and you can, too)

In an effort to ensure the flow of gas to the West, Ukraine’s parliament is considering legislation that would allow the country’s gas transit and storage facilities to be leased as joint ventures with the United States or EU member countries. Under the proposal, Ukraine would have a 51 percent share and foreign investors would be offered 49 percent. (Related Article: Moscow and Kiev: A Dialogue Of The Deaf)

Ukraine is now enduring its third Gazprom cutoff since 2006, and is looking for ways to reduce its reliance on Russia for energy. Still, Kiev needs the income from delivering Russian gas to Europe and wants to make its transit system more reliable.

As a result, acting Ukrainian Prime Minister Arseny Yatseniuk told parliament on June 19 that the joint venture, if approved, would mean an unbroken flow of fees from EU gas customers as well as investment income. He added, “If Europeans join this company, Russia will not build Southstream.”

Southstream is a pipeline that Gazprom is building to ship gas through southeastern Europe, across the Black Sea and on to Western Europe, bypassing Ukraine altogether. That would deny Ukraine of any transit payments it’s been receiving from the West.

Source: http://oilprice.com/Latest-Energy-News/World-News/Russia-Halts-Talks-With-Ukraine-Over-Gas-Debt.html

The Christian Science Monitor has assembled a diverse group of the best energy bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link in the blog description box above.

Share this story:
 
 
Make a Difference
Inspired? Here are some ways to make a difference on this issue.
Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.
 

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...