News / Economy

Russia Orders Ukraine to Prepay for Natural Gas

Map of gas pipelines from Russia into Ukraine, Europe.
Map of gas pipelines from Russia into Ukraine, Europe.
VOA News
Russia has ordered energy-dependent Ukraine to pay in advance for all future natural gas deliveries, as Kyiv's cash-poor government struggles to maintain economic and political stability.

The Russian Energy Ministry says Ukraine missed a Wednesday deadline to pay down its $3.5 billion energy debt, and said all gas sent from June 1 will require cash in advance.

It remained unclear late Thursday what impact the pre-payment edict will have on the European Union. Russia supplies about 30 percent of Western Europe's gas needs, with about half of those supplies passing through Ukraine.

In another development, pro-Russian separatists in the eastern Ukrainian regions of Donetsk and Luhansk said they will go ahead with a referendum Sunday on whether to declare independence from Kyiv, despite calls from Russian President Vladimir Putin to postpone the vote.

Russian media quoted separatist Denis Pushilin, leader of the self-declared Donetsk People's Republic, as saying the referendum will ask residents to vote yes or no on whether they support a "proclamation of state independence."

Luhansk residents will be asked the same question, despite recent polling showing 70 percent of the residents in eastern Ukraine want to remain part of the country.

In Washington, the U.S. State Department issued a new travel warning for Ukraine, advising Americans to defer all non-essential travel to the country. It also warned U.S. citizens to avoid Odessa, eastern regions gripped by weeks of separatist protests, and the Crimean peninsula, which was annexed by Moscow in March.  

The United States and Ukraine do not recognize the annexation.

Ukraine has so far refused to pay down its energy debt, to protest Moscow's recent gas price increase that nearly doubles what Ukraine's energy monopoly Naftogaz pays its neighbor.

Russia cut off gas supplies to its neighbor twice in the past decade, and each time Moscow accused Kyiv of siphoning off supplies meant for Western Europe.  

The 2006 and 2009 cutoffs led to major energy disruptions in EU countries before payment agreements between Moscow and Kyiv were reached and gas flow restored.

The Russian president last month warned the European Union that it would require gas prepayments from Ukraine, unless Europe helped cover the Ukraine debt. Since then, the International Monetary Fund has approved a loan package to Kyiv that includes an initial payment of more than $2 billion.

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Comment Sorting
by: Not Again from: Canada
May 09, 2014 7:49 PM
Ukraine needs to charge Russia for its unlawful occupation of the Crimea, 30+ billion a year, at least; and have the EU transfer at least 50% of the EU gas payments, from the Russian account into a Ukrainian bank account.

by: wayne coady from: nanaimo BC
May 09, 2014 12:50 AM
Ukrine seems to be the gateway for Russia to get its gas to Europe, so why not just cut off the feed lines ? This would be the best way for the Ukrine to make a point. Back off Russia or we will all freeze together and you Russia will lose your market .

by: jdusa from: USA
May 08, 2014 10:44 PM
Putin is a very intelligent person, dont think otherwise. He knows how to manipulate/gain respect of his countryman. Unfortunately he is hitleristic. He has the Ukraine by the shorthairs and knew the control he had over these pipelines way before all of this started. Republicans and Democrats suck all of them.Man up America and vote independent. Nothing is getting voted thru anyway, might as well make a statement!

by: Anonymous
May 08, 2014 10:39 PM
Alternative energy must be found., and Putins pipelines must be cut off from Europe. No better time than now.

by: Will from: Canada
May 08, 2014 8:55 PM
The Ukrainians were getting their natural gas from Russia at about a 50% discount to the going world rate so a doubling of the price means that they will now have to pay the same price as the rest of us - boo hoo. That is what happens when a country succumbs to western interference and pressure and turns it back on a long time friend and generous supporter.

by: Not conned from: Toronto
May 08, 2014 8:39 PM
I don't understand how Russia can take Crimea and expect Ukraine to then pay it's gas debt.

by: Dell Stator from: USA
May 08, 2014 8:17 PM
Energy Dependent Ukraine.... NO IT ISN'T - 25% of the Ukraines primary energy comes from Russian gas.
The need for half of that could be eliminated by lowering thermostats 5 or 10 F, yes, a bit chilly, put on a sweater - OR INSULATE THE BUILIDING! LOTS of uninsulated old buildings, typical of established countries.
Europe could easily make up the other 12% reverse pumping LNG, which could be done for the same cost US pays for LNG, from the same place the US buys it, the Middle East. Europe has TWO DOZEN LNG ports, under utilized thanks to Russia dumping gas at rock bottom prices to enslave the Euro Zone.
It took me 5 mins to verify the above via multiple gov't sources.
Do "Jouralists" actually have the ability to research or permission from the publishers to write the truth?

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