News / Europe

Ukraine Stolen Gas Claim Raises Stakes in Dispute With Russia

A gas pipeline station worker passing the gas pressure engines in Bil 'che-Volicko-Ugerske underground gas storage facilities in Strij, outside Lviv, Ukraine, May 21, 2014.
A gas pipeline station worker passing the gas pressure engines in Bil 'che-Volicko-Ugerske underground gas storage facilities in Strij, outside Lviv, Ukraine, May 21, 2014.
Ukraine raised the stakes in a dispute with Russia over gas supplies on Tuesday, saying Russian state-controlled company Gazprom owed Kyiv natural gas worth around $1 billion which it had "stolen'' when Moscow annexed Crimea.

Russia has warned it will reduce gas supplies to Ukraine on June 3 if Kyiv fails to pay in advance for next month's deliveries, causing concerns that onward supplies to Europe could be threatened.

With newfound confidence inspired by the election of a  Ukrainian president at the weekend, Prime Minister Arseniy Yatsenyuk said gas talks with Russia could not progress until he heard Moscow's response on giving back the 2.2 billion cubic meters of gas which he said was taken when the country's Black Sea region was annexed by Russia in March.

The dispute has strained ties between the two neighbors since Moscow almost doubled the price for its deliveries to Ukraine after protesters toppled a pro-Russia Ukrainian president.

Implications for EU

It has also renewed concern in the European Union that there could be disruptions to Russian supplies delivered through pipelines that cross Ukraine.

"We want to hear a response from Russia... on the question of returning to Ukraine 2.2 billion cubic meters of gas which Russia stole through Chernomornaftogaz on the territory of [Crimea]," Yatsenyuk told a televised session of his cabinet.

He did not explain the source of that figure but Kyiv had referred earlier to a similar figure held in storage in Crimea.

Yatsenyuk also said if there was no agreement between the two sides by May 29, Ukraine would next meet Gazprom at the Stockholm arbitration court, which would try to resolve the dispute.

He reiterated that Kyiv would pay off its debts when there was an agreement on price.

Asked about the accusation that Moscow had stolen gas, Gazprom spokesman Sergei Kupriyanov said: "We have no idea what he means."

He added that as far as Moscow was concerned, both sides had come up with a plan of action at EU-brokered talks in Berlin: Ukraine would pay Russia $2 billion of its debts by the end of the week, and $500 million by June 7 for May deliveries.

"This position seemed to be the final decision of the three-way meeting," he said.

Discounted gas price

Gazprom CEO Alexei Miller told Rossiya-24 television late on Monday that the company was ready to provide a discounted gas price for Ukraine but only after Kyiv paid at least part of its debt.

Moscow says Ukraine's gas debt stands at $3.5 billion and will switch to pre-payment for June, promising to deliver as much gas as it was paid for.

On Monday, the European Union's energy commissioner, Guenther Oettinger, said Russia and Ukraine had made progress on price at talks in Berlin and that both were considering his proposal for Ukraine to pay $2 billion of its debts by Thursday, which could pave the way for talks on Friday.

But Ukraine's state gas company Naftogaz said on Tuesday no real progress was made with Gazprom, accusing Moscow of sticking to an "unconstructive" position.

Naftogaz said it was ready to pay bills if "a civilized compromise" was found to ensure gas flows to Ukraine.

Ukrainian Energy Minister Yuri Prodan said on Monday there was no final agreement after the Berlin talks and he would not confirm that Ukraine had agreed to pay $2 billion on Thursday. He said the two sides have until Wednesday night to decide.

Sticking point: 2009 contract

Ukraine wants to change a 2009 contract that locked Kyiv into buying a set volume of gas, whether it needs it or not, at $485 per 1,000 cubic meters - the highest price paid by any client in Europe.

Moscow dropped the price to $268.50 after Ukraine's then-President Viktor Yanukovich turned his back on a trade and association agreement with the European Union last year, but reinstated the original price after he was ousted in February.

Ukraine seeks a price of $268.50 per 1,000 cubic meters while Russia still wants $485. Oettinger is trying to get the two sides to agree in the middle.

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Comment Sorting
by: ringo from: RF
May 28, 2014 3:10 AM
This is the market, this is democracy, this is free trade at free prices. United States as a bulwark of democracy certainly will support freedom of pricing on the world market. This is business and nothing personal.

by: John Hunter from: Pittsburgh
May 27, 2014 1:37 PM
You'd figure taking Crimea would've settled that debt.

by: Erik from: Sweden
May 27, 2014 10:39 AM
Why isn't the largest country in the world enough for president Putin?

by: Punnisher from: Florida
May 27, 2014 8:58 AM
So the price of 268 was good as long as Victor Yanukovich was Pres otherwise the price is 485 per 1000 cu mtrs, Hmmm ? I smell a RAT
In Response

by: Bayo from: Houston
May 27, 2014 10:41 AM
If your neighbour suddenly turn enemy, will you continue favouring him?

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