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Russia getting support from European Commission in Ukraine gas talks - minister


Russia getting support from European Commission in Ukraine gas talks - minister

Russia getting support from European Commission in Ukraine gas talks - minister
Photo credit: RIA Novosti/Alexey Filippov

The European Commission has effectively supported the Russian position in the second and third round of talks on payment of Ukraine’s gas debt to Russia, Energy Minister Alexander Novak said in an interview with Rossiya 24 television.

“I consider that the European Commission has behaved quite constructively at these and previous consultations and many of the positions that Russia has announced are effectively being supported, including over the need to repay the debt. In the estimation of [European] Energy Commissioner [Gunther Oettinger] that price the Ukrainian side is declaring - $268 per 1,000 cubic meters - is not a market price,” Novak said.

“The Ukrainian side constantly changes its position: it previously said it would not contest the debt as of April 1, 2014, either the prices or volumes Then it said it would only pay for deliveries in February and March [and would dispute the price of deliveries in 2013],” Novak said.

The talks scheduled for Monday will include a discussion of the repayment schedule, he said. The price proposed by Ukraine - $268 per 1,000 cubic meters - is unacceptable to Russia, he said.

“The discussion here can only be about the price that has shaped up on the market and at which Russia delivers gas to neighboring, analogous EU countries,” he said, adding that price, all the same, remains the subject for talks between the companies, since the contract contains a great number of provisions.

The European Commission has come to the “complete understanding” that Russia has no interest in escalating the situation and is fully meeting its commitments.

“Meanwhile, the Ukrainian side keeps changing its position, making fresh demands, and is still not paying for the gas being delivered,” Novak said.

Russia, in contrast to Ukraine, is not aggravating the situation by filing a lawsuit in Stockholm for arbitration, which will prevent a speedy settlement of the issues in dispute.

“We are trying to find a compromise and reach an agreement. We are interested in having reliable, stable gas deliveries to consumers in Ukraine and in Europe,” he said, Interfax reports.

Gazprom has plans to file a lawsuit against Naftogaz in Stockholm arbitration, Gazprom CEO Alexei Miller said without providing further detail. Gazprom previously reported that it presented Ukraine a bill totaling $11.388 for failing to take up gas volumes specified under take-or-pay provisions in 2013 and another totaling $7.2 billion for 2012. The Ukrainian side has refused to pay the bills.

“Simultaneously with its decision no to impose prepayment requirements until June 9, Gazprom has made the decision to refrain from filing suit in Stockholm arbitration during this period,” Gazprom CEO Alexei Miller told journalists on Monday.

A discount from Gazprom could reduce the price Ukraine pays for Russian gas below $385.5 per 1,000 cubic meters, Gazprom CEO Alexei Miller told journalists.

“If Ukraine repays its gas debt, the Russian side will be ready to consider an arrangement for resolving the issue of price not only with a reduction in the export duty, but also under a direct commercial agreement on a corporate basis,” Miller said.

Gazprom confirmed on Monday receipt of the first tranche of Naftogaz payment for gas equal to $786 million. “We welcome the start to repayment by Ukraine and reschedule the prepayment regime for June 9,” Gazprom CEO Alexei Miller told journalists.

“Introduction of the prepayment regime will depend on repayment of the debt for gas delivered prior to April 1 totaling $2.237 billion, a portion of which was paid today, and from progress in payment for deliveries in April and May. Payment for May must be made before June 9,” Miller said, Interfax reports.

The Naftogaz Ukrainy Company has sent Gazprom a draft supplementary agreement to the concluded contract, dated 2009, for the purchase-and-sale of natural gas. The draft supplementary agreement “will make it possible to settle all contentious issues regarding the import of Russian gas,” the press service of the Ukrainian company announced on Monday.

“The supplementary agreement provides for the introduction of changes to the contract terms concerning price, amounts and conditions for the deliveries of natural gas,” the company announcement said.

The announcement also points out that on Monday “a fourth round of trilateral talks of Ukraine, Russia, and the European Union will be held on matters relating to the supply of Russian gas to Ukraine”.

“The NAK (national joint-stock company) Naftogaz Ukrainy intends to carry on talks with the OAO (public joint-stock company) Gazprom in a constructive vein,” the company’s press service emphasized.

Russia confirmed receiving $786.4 million as payment for part of Ukrainian gas debt on Monday, the day when Moscow, Kiev and EU Energy Commissioner Gunther Oettinger will meet to discuss gas agreement and discounts.

Ukraine’s parliament-appointed Prime Minister Arseniy Yatsenyuk said that Monday’s talks between Russian Energy Minister Alexander Novak and Ukrainian Energy Minister Yuriy Prodan will either result in signing a Russian-Ukrainian deal or in Kiev turning to a Stockholm arbitration court.

Ukraine’s Naftogaz of Ukraine has sent a draft additional agreement to Russia’s gas giant Gazprom which can settle all the controversial matters, the company said in a statement.

“The additional agreement envisages the contract’s price, volume and the terms of natural gas supplies,” the statement said. “Naftogaz of Ukraine intends to resume the talks with Gazprom in a constructive manner.”

The European Commission is also committed to reaching a deal.

“The European Commission believes it necessary to use all the possibilities to reach a mutually acceptable compromise. Russia and Ukraine must try to find at least an intermediate solution to prevent interruption in gas supplies,” an European Commission official said.

On Friday, Ukraine said it paid $786 million, which Prodan said Kiev does not doubt as debt. Ukraine calculated the debt at $268.5 per 1,000 cubic meters of gas.

Kiev has long been seeking a revision of a 2009 contract, under which it is to buy a set volume of gas, whether it needs it or not, at Europe’s highest price of $485 per 1,000 cubic meters.

Moscow dropped the price to $268.5 after Ukraine’s then-President Viktor Yanukovych turned his back on an association agreement with the EU last year, but reinstated the original price after he was ousted in February.

Gazprom says Ukraine owes it around $3.5 billion, and has threatened to stop supplying the neighboring former Soviet republic with gas if it fails to make a pre-payment for June supplies.

CEO Alexei Miller said that Gazprom is not ready to discuss a discount in the current circumstances.

Oettinger indicated that the European Commission may support Ukraine’s discount demands but not before Ukraine repays the debt.

Prodan also said that Ukraine is preparing a suit worth “hundreds of billions of dollars” against Crimea’s seccession from Ukraine in March.

“It is part of a larger suit which Ukraine is preparing against Russia,” he said.

On May 30, Prodan said that Kiev was ready to file a suit against Russia’s Gazprom to the court of arbitration in Stockholm to make Gazprom revise its contract prices for gas.


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