Russia, Ukraine inch closer to gas deal
the associated press | June 03,2014
Alexey Miller, CEO of the Russian energy supplier Gazprom, listens during a press conference as part of a meeting of the European Union energy commissioner Guenther Oettinger Russia’s energy minister Alexander Novak and Ukraine’s energy minister Yuri Prodan in Berlin, Friday.
BRUSSELS — Russia and Ukraine on Monday made substantial progress toward reaching an agreement on a lower price for gas deliveries and the payment of outstanding debt by Kiev, in a bid to avert a disruption of gas supplies that could also affect western Europe, a top EU official said.
The chief executives of the two sides’ state gas companies agreed on a proposal that would see a lower gas price for Ukraine complete with a debt repayment schedule, said the European Union’s Energy Commissioner, Guenther Oettinger, who hosted the negotiations in Brussels.
Russia’s Gazprom and Ukraine’s Naftogaz will now take the proposal to their experts and shareholders for approval, notably the respective governments, which is the prerequisite for another round of talks to seal the deal in the coming days, he said.
Oettinger declined to divulge the envisioned new gas price for Ukraine, but said it would be lower than the $485 Ukraine currently pays but above the discounted rate of $268 per 1,000 cubic meters it was once granted by Russia. The price should then be held steady for one year to guarantee supply safety, he added.
In the EU-facilitated talks that also featured both countries’ energy ministers, the parties agreed Russia will neither request prepayment for further deliveries nor restrict supplies while negotiations continue, the EU said.
The progress in the talks came after Ukraine’s Naftogaz paid Gazprom $786 million for the February and March supplies following the first round of EU-mediated talks in Berlin last week.
Officials were keen on avoiding an interruption of gas deliveries to Kiev because it could also disrupt supplies for western Europe since Ukraine is an important gas transit country.
Moscow has put Kiev’s gas debts dating back to November at $3.5 billion, and Miller said last week that gas delivered in May could take it up to $5.2 billion. Oettinger said only the bills for two months from last year and April and May of this year are now outstanding, but he did not cite an overall debt figure.
Ukraine, which saw price discounts granted by Russia canceled following the ouster of pro-Russian President Viktor Yanukovych, has been seeking a new price agreement before settling debts.
Gazprom scrapped a discount granted to Yanukovych in December and then another rebate linked to a 2010 deal on Russian navy presence in Ukraine’s Crimea region, which Moscow annexed in March. Canceling the discounts raised the price by 80 percent.
Yanukovych fled to Russia in February after months of protests, triggered by his decision to dump a pact with the EU in favor of closer ties with Moscow.