News / Europe

Russia's Gazprom Gives Kyiv Extension Into Next Week in Gas Dispute

FILE - Workers stand near pipes at a gas compressor station near Uzhhorod May 21, 2014. FILE - Workers stand near pipes at a gas compressor station near Uzhhorod May 21, 2014.
x
FILE - Workers stand near pipes at a gas compressor station near Uzhhorod May 21, 2014.
FILE - Workers stand near pipes at a gas compressor station near Uzhhorod May 21, 2014.
Reuters
Russia's Gazprom gave Ukraine on Monday an extension into next week to resolve a gas price dispute at the heart of the two countries' confrontation, a day before Moscow was due to switch off the gas unless Kyiv paid in advance.
 
The argument over prices for natural gas has quietly simmered in the background even as the two countries have squared off over Moscow's seizure of Ukraine's Crimea peninsula and over a pro-Russian rebel uprising in eastern Ukraine.
 
Since a pro-Moscow president was toppled in Ukraine in February, Russia has demanded a sharp increase in the price Ukraine pays for gas. Kyiv says it cannot afford it and wants to pay a discounted price which it negotiated in the past.
 
While the dispute has gone on, Gazprom has continued billing Kyiv at the higher rate. It says Ukraine already owes it more than $5 billion in unpaid bills and is running up more debt at a rate of more than $1 billion per month.
 
Moscow had previously threatened to switch off Ukraine's gas as soon as this Tuesday unless it began paying up front for supplies, a measure that could potentially have also hit European supplies shipped through Ukrainian pipes.
 
But after Kyiv paid some of its gas debt, Gazprom announced a six-day extension of the deadline until June 9. Gazprom also said that it would not sue Ukraine's gas supplier Naftogaz over unpaid bills during the coming week.
 
“Payment for May should be done before June 9,” Gazprom CEO Alexei Miller said in a statement.
 
That means gas will continue to flow to Ukraine and Europe while President Vladimir Putin and other world leaders - including Ukraine's new president-elect Petro Poroshenko - are in France this week for events commemorating the allied forces' “D-Day” landings in Normandy during World War II.
 
The Kremlin has announced no plans for talks with Poroshenko or U.S. President Barack Obama during Putin's visit on Thursday and Friday but has said it cannot rule out the possibility of informal meetings. They are all due to attend a lunch on June 6.
 
Putin has pulled back some of the tens of thousands of troops he had massed on Ukraine's border and says he is prepared to work with Poroshenko, who won a landslide presidential election a week ago. But the past week has also seen a sharp increase in violence in eastern Ukraine, with dozens of pro-Moscow rebel fighters killed in a government assault, most of them Russians whose bodies were sent back across the border.
 
More talks
 

Talks between the Russian gas exporter and Ukraine were due to resume later on Monday in Brussels, under the auspices of the European Union.
 
EU mediator Guenther Oettinger said on Friday a $786 million partial payment for back gas bills was on its way to Moscow, clearing the way for further talks on Monday.
 
Gazprom confirmed on Monday that it had received the payment.
 
The delicate negotiations over gas supplies worth billions of dollars provide the economic backdrop for the crisis in Ukraine, which has led to the biggest confrontation between the West and Russia since the Cold War.
 
Ukraine's industry-heavy economy depends on Russian natural gas to be competitive. Since the fall of the Soviet Union in 1991, Moscow has frequently used its control over energy resources to influence politics.
 
Kyiv wants to return to a discount gas price of $268.50 per 1,000 cubic meters while Moscow is demanding $485 - the highest paid by any client, which Kyiv says would effectively bankrupt it. Most European countries are believed to pay Russia around $300-$400 for gas, although the prices are not published.
 
Gazprom's Miller said that averting the requirement for prepayment for gas would depend on whether Kyiv pays off the remaining $2.24 billion for deliveries from before April 1 and makes “progress” in paying off for April and May.
 
“The Russian side would be ready to look into the resolution of the pricing scheme issue through cuts in exports custom duty” if Ukraine settles all its bills, he said.
 
Europe gets a third of its gas needs from Russia, and almost half of these supplies are sent via Ukraine. On Monday, Gazprom said gas was flowing to Europe as usual.
 
The debt Moscow says Kyiv already owes is equivalent to around 3 percent of Ukraine's GDP. Delaying an agreement will make it increasingly difficult for already cash-starved Ukraine to meet its obligations.
 
Moscow's leverage is blunted somewhat because the peak winter demand season is now over and storage tanks across Europe are full. Past pricing disputes between Moscow and Kiev in 2006 and 2009 took place during times of peak winter demand, causing shortages and freezing across Europe.
 
But following a mild winter and spring as well as healthy supplies from non-Russian sources such as Norway and Qatar, Europe's gas storage sites are well filled this year.
 
The healthy supply is reflected in wholesale prices, which have fallen 30 percent since the start of the Ukraine crisis in late February to the lowest levels since 2010.

You May Like

New England Bears Brunt of US Blizzard

Boston, surrounding region grapple with as much as 3 feet of snow, coastal flooding; leaders in New York, spared most severe weather, criticized for being overly cautious More

China Lifts Lid on Sale of Fake Goods Online

A recent survey found nearly 60 percent of a random sample of items bought from Taobao were fake More

Upward Aims to Create Old-girls Network in Silicon Valley

Lisa Lambert, an executive with Intel Corp.'s venture-capital unit, responds to the gender-disparity debate by creating a new social organization More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Obama Urges Closer Economic Ties During Historic India Visiti
X
Aru Pande
January 26, 2015 9:33 PM
U.S. President Barack Obama says the United States and India must do better to capitalize on untapped potential in their economic relationship - by removing some of the roadblocks to greater trade and investment. As VOA correspondent Aru Pande reports from New Delhi, Obama spoke after participating in India’s Republic Day celebration.
Video

Video Obama Urges Closer Economic Ties During Historic India Visit

U.S. President Barack Obama says the United States and India must do better to capitalize on untapped potential in their economic relationship - by removing some of the roadblocks to greater trade and investment. As VOA correspondent Aru Pande reports from New Delhi, Obama spoke after participating in India’s Republic Day celebration.
Video

Video US, EU Threaten New Russia Sanctions Over Ukraine

U.S. President Barack Obama has blamed Russia for an attack by Ukrainian separatists that left dozens dead in the port of Mariupol and cast further doubt on the viability of last year’s cease-fire with the Kyiv government. VOA’s Michael Bowman reports from Washington.
Video

Video White House Grapples With Yemen Counterterrorism Strategy

Reports say the U.S. has carried out a drone strike on suspected militants in Yemen, the first after President Barack Obama offered reassurances the U.S. is continuing its counterterrorism operations in the country. The future of those operations has been in question following the collapse last week of Yemen’s government. VOA White House correspondent Luis Ramirez reports.
Video

Video Kerry Warns Against Violence in Nigeria Election

US Secretary of State John Kerry visited Nigeria Sunday in a show of the level of concern within the U.S. and the international community over next month’s presidential election. Chris Stein reports.
Video

Video Zoo Animals Show Their Artistic Sides

The pursuit of happiness is so important, America's founding fathers put it in the Declaration of Independence. Any zookeeper will tell you animals need enrichment, just like humans do. So painting, and even music, are part of the Smithsonian National Zoo's program to keep the animals happy. VOA’s June Soh met some animal artists at the zoo in Washington. Faith Lapidus narrates.
Video

Video Worldwide Photo Workshops Empower Youth

Last September, 20 young adults from South Sudan took part in a National Geographic Photo Camp. They are among hundreds of students from around the world who have learned how to use a camera to tell the stories of the people in their communities through the powerful medium of photography. Three camp participants talked about their experiences recently on a visit to Washington. VOA’s Julie Taboh reports.
Video

Video Saudi, Yemen Developments Are Sudden Complications for Obama

The death of Saudi Arabia's King Abdullah and the collapse of Yemen’s government have cast further uncertainty on U.S. efforts to fight militants in the Middle East and also contain Iran’s influence in the region. VOA White House correspondent Luis Ramirez reports on the new complications facing the Obama administration and its Middle East policy.
Video

Video Progress, Some Areas of Disagreement in Cuba Talks

U.S. and Cuban officials are reporting progress from initial talks in Havana on re-establishing diplomatic ties. U.S. Assistant Secretary of State (for Western Hemisphere Affairs) Roberta Jacobson said while there was agreement on a broad range of issues, there also are some “profound disagreements” between Washington and Havana. VOA State Department correspondent Pam Dockins has the story.
Video

Video US, Japan Offer Lessons as Eurozone Launches Huge Stimulus

The Euro currency has fallen sharply after the European Central Bank announced a bigger-than-expected $67 billion-a-month quantitative easing program Thursday - commonly seen as a form of printing new money. Henry Ridgwell reports for VOA from London on whether the move might rescue the eurozone economy -- and what lessons have been learned from similar programs around the world.
Video

Video Nigerian Elections Pose Concern of Potential Conflict in 'Middle Belt'

Nigeria’s north-central state of Kaduna has long been the site of fighting between Muslims and Christians as well as between people of different ethnic groups. As the February elections approach, community and religious leaders are making plans they hope will keep the streets calm after results are announced. Chris Stein reports from the state capital, Kaduna.
Video

Video As Viewership Drops, Obama Puts His Message on YouTube

Ratings reports show President Obama’s State of the Union address this week drew the lowest number of viewers for this annual speech in 15 years. White House officials anticipated this, and the president has decided to take a non-traditional approach to getting his message out. VOA White House correspondent Luis Ramirez reports.
Video

Video S. Korean Businesses Want to End Trade Restrictions With North

Business leaders in South Korea are calling for President Park Geun-hye to ease trade restrictions with North Korea that were put in place in 2010 after the sinking of a South Korean warship.Pro-business groups argue that expanding trade and investment is not only good for business, it is also good for long-term regional peace and security. VOA’s Brian Padden reports.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid