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

    Russian-speaking Muslim Exiles Fear Possible Russia-Turkey Thaw

    Exiled from Russia as Islamic radicals and extremists, thousands found asylum in Turkey

    US Presidential Election Ends at Conventions for Territorial Citizens

    Citizens of US territories like Guam or Puerto Rico enjoy participation in US political process but are denied right to vote for president

    UN Syria Envoy: 'Devil Is in the Details' of Russian Aleppo Proposal

    UN uncertain about the possible humanitarian impact of Russian proposal to establish escape corridors in Aleppo

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Uganda Unveils its First Solar-powered Busi
    X
    July 28, 2016 4:16 AM
    A solar-powered bus described by its Ugandan makers as the first in Africa has made its public debut. Kiira Motors' electric bus, Kayoola, displayed recently at a stadium in Uganda's capital. From Kampala, Maurice Magorane filed this report narrated by Salem Solomon.
    Video

    Video Uganda Unveils its First Solar-powered Bus

    A solar-powered bus described by its Ugandan makers as the first in Africa has made its public debut. Kiira Motors' electric bus, Kayoola, displayed recently at a stadium in Uganda's capital. From Kampala, Maurice Magorane filed this report narrated by Salem Solomon.
    Video

    Video Silicon Valley: More Than A Place, It's a Culture

    Silicon Valley is a technology powerhouse and a place that companies such as Google, Facebook and Apple call home. It is a region in northern California that stretches from San Francisco to San Jose. But, more than that, it's known for its startup culture. VOA's Elizabeth Lee went inside one company to find out what it's like to work in a startup.
    Video

    Video Immigrant Delegate Marvels at Democratic Process

    It’s been a bitter and divisive election season – but first time Indian-American delegate Dr. Shashi Gupta headed to the Democratic National Convention with a sense of hope. VOA’s Katherine Gypson followed this immigrant with the love of U.S. politics all the way to Philadelphia.
    Video

    Video Philadelphia Uses DNC Spotlight to Profile Historic Role in Founding of United States

    The slogan of the Democratic National Convention now underway in Philadelphia is “Let’s Make History Again” which recognizes the role the city played in the foundation of the United States in the 18th century. As VOA’s Kane Farabaugh reports, local institutions are opening their doors in an effort to capitalize on the convention spotlight to draw visitors, and to offer more than just a history lesson.
    Video

    Video A Life of Fighting Back: Hillary Clinton Shatters Glass Ceiling

    Hillary Clinton made history Thursday, overcoming personal and political setbacks to become the first woman to win the presidential nomination of a major U.S. political party. If she wins in November, she will go from “first lady” to U.S. Senator from New York, to Secretary of State, to “Madam President.” Polls show Clinton is both beloved and despised. White House Correspondent Cindy Saine takes a look at the life of the woman both supporters and detractors agree is a fighter for the ages.
    Video

    Video Dutch Entrepreneurs Turn Rainwater Into Beer

    June has been recorded as one of the wettest months in more than a century in many parts of Europe. To a group of entrepreneurs in Amsterdam the rain came as a blessing, as they used the extra water to brew beer. Serginho Roosblad has more to the story.
    Video

    Video First Time Delegate’s First Day Frustrations

    With thousands of people filling the streets of Philadelphia, Pennsylvania for the 2016 Democratic National Convention, VOA’s Kane Farabaugh narrowed in on one delegate as she made her first trip to a national party convention. It was a day that was anything but routine for this United States military veteran.
    Video

    Video Commerce Thrives on US-Mexico Border

    At the Democratic Convention in Philadelphia this week, the party’s presumptive presidential nominee, Hillary Clinton, is expected to attack proposals made by her opponent, Republican presidential nominee Donald Trump, to build a wall along the U.S.-Mexico border. Last Friday, President Barack Obama hosted his Mexican counterpart, President Enrique Peña Nieto, to underscore the good relations between the two countries. VOA’s Greg Flakus reports from Tucson.
    Video

    Video Film Helps Save Ethiopian Children Thought to be Cursed

    'Omo Child' looks at effort of African man to stop killings of ‘mingi’ children
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video Recycling Lifeline for Lebanon’s Last Glassblowers

    In a small Lebanese coastal town, one family is preserving a craft that stretches back millennia. The art of glass blowing was developed by Phoenicians in the region, and the Khalifehs say they are the only ones keeping the skill alive in Lebanon. But despite teaming up with an eco-entrepreneur and receiving an unexpected boost from the country’s recent trash crisis the future remains uncertain. John Owens reports from Sarafand.
    Video

    Video Migrants Continue to Risk Lives Crossing US Border from Mexico

    In his speech Thursday before the Republican National Convention, the party’s presidential candidate, Donald Trump, reiterated his proposal to build a wall along the U.S.-Mexico border if elected. Polls show a large percentage of Americans support better control of the nation's southwestern border, but as VOA’s Greg Flakus reports from the border town of Nogales in the Mexican state of Sonora, the situation faced by people trying to cross the border is already daunting.

    Special Report

    Adrift The Invisible African Diaspora