RIA Novosty reported that June 9, Ukraine and Russia failed to reach an accord on natural gas deliveries during the overnight negotiations hosted by the European Union. The Ukrainian side rejected a discount on gas suggested by Russia. Ukrainian Energy Minister Yuri Prodan told reporters after the talks, “According to this proposal, the price reduction should be based on a regulation of the Russian government. However, this decision can be withdrawn any time. Of course, the Ukrainian side doesn’t accept this pricing mechanism. We want to reach an agreement on a fair market-based price.”
The similar approach was used in the Kharkiv Pact as of April 2010, when Moscow and Kiev agreed that the Russian lease on naval facilities in Crimea would be extended beyond 2017 by 25 years (to 2042) with an additional 5 year renewal option (to 2047) in exchange for a multiyear discount of $100 per 1,000 cubic meters on account of the export tax relief. However, the discount was cancelled April 1 after Crimea had rejoined Russia.
The European Commission proposed a package at the June 2 round of trilateral negotiations to settle the debt and define future prices for the next 12 months. The Ukrainian Energy Minister confirmed Ukraine’s commitment to relate the debt recovery to the price settlement.
For his part, Alexandr Novak, Russia’s Energy Minister, expressed hope that “Russia’s constructive proposal” concerning gas prices for June, July, and August would suit all the involved parties.
The Russian policy maker summed up the results of the fifth round of the gas talks. He commented that the undisputable part of Ukraine’s debt for November-December 2013 stood at $1.454 billion as of June 9. Besides, the partial debt of $500 million for April – May is expected to be settled until June 10.
EU Energy Commissioner Guenther Oettinger told reporters in Brussels that the three-party talks may resume June 10 or 11.
Gazprom, the Russian state gas exporter, is set to a prepayment scheme for AK Naftogaz Ukrainy, its Ukrainian counterpart, in case Kiev fails to pay off its mounting debts accumulated since early 2014.
Ukraine transferred $786 million last week to Gazprom’s account for February and March supplies. Ukraine still hasn’t paid $2.2 billion for gas delivered this year. As of June 2, the total debt including supplies for 2013 equals $5 billion.
