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Gazprom puts Ukraine on gas prepayment plan after ‘chronic’ failure to pay debt
RT,
16 June, 2014
After
failing to pay its gas bill, Ukraine now has to pay in advance for
any natural gas from Russia, Gazprom said on Monday. Both companies
have filed lawsuits against each other at the Stockholm Arbitration
Court
“This
decision was taken due to systematic failure of Naftogaz Ukraine to
pay. The debt of the company for Russian gas stands at $4.458
billion, including $1.451 billion for November and December 2013, and
$3.007 billion for April-May 2014,” Gazprom
said in a statement posted
on their website.
“They’ve
paid zero. Correspondingly we deliver zero,” Sergey
Kupriyanov, a Gazprom spokesperson said in a press conference
following the announcement.
Reuters
reports that gas supplies to Ukraine were restricted off as soon as
the deadline at 10:00am in Moscow passed.
Both
companies have announced they are opening lawsuits with the Stockholm
Chamber of Commerce Arbitration.
Gazprom
announced wants to recover the $4.5 billion worth of debt and also
seek compensation for Ukraine's failure to import the agreed upon
amount of natural gas under their "take
or pay"
contract with Gazprom over the past two years. The penalty in
accordance with the contract could be around $18 billion.
Gunther
Oettinger, who has been the main broker between the three-way talks
between Russia, Ukraine, and the EU, has urged Russia to ‘reconsider’
its decision to place Ukraine on a prepayment gas plan.
"Further
invitations for trilateral talks in June are foreseen," EU
energy minister Gunther Oettinger said at a news conference in
Vienna.
Oettinger
has been the main broker of the three-way talks between Russia,
Ukraine, and the EU, all of which have ended in deadlock.
Yury
Prodan, Ukraine's energy minister, has stressed that taking the case
to Stockholm is the only way to settle the matter.
Kiev
was also late in payments in the winters of 2006 and 2009. Both
periods lasted about three weeks, during which Kiev attempted to
siphon off supplies for themselves, which left millions of European
homes without heat.
“Volumes
of gas for European customers will be fully met in compliance with
their contracts. Naftogaz must ensure transportation to the delivery
points," Kupriyanov
said.
Further
actions will be taken after Gazprom head meets with Russian President
Vladimir Putin today, Deputy Prime Minister Arkady Dvorkovich told
reporters at the World Petroleum Congress, being held in Moscow June
15-19.
Russia’s
energy minister Aleksander Novak and Gazprom head Aleksey Miller will
hold a press conference later this afternoon.
Ukraine
has accumulated a multi-billion dollar debt for natural gas supplied
by Russia and is unwilling to pay. It calls the 10-year gas contract
that former Prime Minister Yulia Tymoshenko signed with Russia back
in 2009 unacceptable and demands that Russia lower the price
The
sudden halt shot up natural gas prices in Europe, a trend many
analysts will repeat itself this time around.
Moscow
was willing to offer a discount and even recalculate the debt Ukraine
has accumulated since April to account for it, but Kiev rejected the
offer, saying it was not good enough. Gazprom considers Ukraine’s
position a form of blackmail.
After
negotiations on Sunday, Gazprom announced that their final pricing
offer was $385 per 1,000 cubic meters of natural gas, which Ukraine
still rejected.
Price
disputes between the two neighbors intensified after a government
coup followed by violence in Ukraine, when the price of gas exports
from Moscow to Kiev shot up from $268.50 to $485.00.
Europe
imports a third of its natural gas from Russia, and nearly half of
that is delivered via Ukraine. In 2012, over 84 billion cubic meters
of gas traveled from Russia to Europe through Ukraine.
Under
the current contract, Ukraine is required to import 40 billion cubic
meters of gas. Ukraine’s energy minister said on Friday that
Ukraine has more than 15 billion cubic meters of Russian gas in
storage.
Kiev
pumps astronomical
volumes of gas into
underground storage
without
paying - Gazprom
CEO
16
June, 2014
During
the time that Ukraine has not paid for Russian gas, it has pumped
astronomical volumes into its underground gas storage facilities,
Gazprom’s CEO Alexey Miller said on Monday. Out of 12.5 billion
cubic meters of gas in underground storage, 11.5 billion cubic meters
is Russian gas that Ukraine has not paid for, Miller added. He said
the storage facilities need more than 18 billion cubic meters to be
prepared for winter
Gazprom
has an agreement with the European Commission that, if shipments of
gas through Ukraine are interrupted, then the issue of the OPAL
pipeline capacity will be resolved, Gazprom CEO Alexei Miller said at
a press conference at Interfax's central office.
The
commission has imposed a ban on Gazprom's use of 50% capacity at the
eastern branch where the Nord Stream pipeline meets OPAL.
The
conditions proposed to Kiev during gas talks were better than those
in place under former Ukrainian president Viktor Yanukovych, Gazprom
CEO Alexei Miller said at a meeting with Russian Prime Minister
Dmitry Medvedev.
Firstly,
the Russian side was ready to guarantee that the discount of $100 per
1,000 cubic meters would not change and ultimately proposed
"guaranteeing no change in the discount until the current
contract expires, that is, until the end of 2019," Miller said.
Secondly,
"we virtually proposed to our Ukrainian colleagues suspending
the take-or-pay provision for 2014," he said.
"The
situation in the Ukrainian economy is indeed grave and we understand
that Naftogaz will find it difficult, if not impossible, to commit to
taking the minimum annual contracted amount.
At
the beginning we reduced this to 34 billion cubic meters, then 27
billion, and finally we offered to allow Ukraine to take whatever
amount in 2014 it felt comfortable with, at $385 per 1,000 cubic
meters," Miller said.
"Of
course, such gas supply provisions were not available during
Yanukovych's tenure," he said.
"In
other words, they were offered ultra-discount terms, even compared to
the gas cooperation terms that existed under the previous president.
Nonetheless, they refused to accept those terms and, in effect,
artificially created a gas crisis," Medvedev said.
Gazprom
imposes advance payment requirement for gas deliveries to Ukraine,
files $4.5 bln lawsuit in Stockholm arbitration
Gazprom
has switched to requiring advance payment from Ukraine's Naftogaz on
deliveries of natural gas in accordance with the contract between
them and effective from 10:00 am local time, the Russian gas giant
said. Gazprom has filed a lawsuit in Stockholm arbitration seeking to
collect $4.5 billion in debt for gas from Ukraine's Naftogaz, the
Russian gas giant said.
"The
decision was made due to Naftogaz Ukrainy's chronic nonpayment. Its
overdue indebtedness for Russian gas totals $4.458 billion: $1.451
billion for November-December 2013 and $3.007 billion for April-May
2014," the statement says.
Gazprom
files $4.5 bln lawsuit against Naftogaz in Stockholm arbitration over
debt for gas
Gazprom
has filed a lawsuit in Stockholm arbitration seeking to collect $4.5
billion in debt for gas from Ukraine's Naftogaz, the Russian gas
giant said. Gazprom has emphasized that Ukraine's Naftogaz remains
contractually obligated to ensure uninterrupted transit of Russian
gas bound for consumers in Europe, Gazprom said in a statement.
Gazprom
expects Ukraine’s Naftogaz to meticulously uphold its contractual
obligations to provide gas transit to third countries, it said.
Read
also: European Union transfers €250 mln financial aid to Ukraine
"In
addition, the European Commission has received timely notification of
possible interruptions in gas transit, in the event that Naftogaz
Ukrainy siphons off gas from transit flows," the statement says.
"Gazprom
has already exerted and will continue to exert every possible effort
aimed at preventing any potential interruption in gas transit for
European consumers," Gazprom said.
Moscow
to switch to gas prepayment system if Ukraine fails to pay $1.95
billion by 6 am GMT
Russia's
energy producer Gazprom is preparing to switch its natural gas
deliveries to Ukraine to a prepayment system, which effectively means
cutting-off gas supplies if Kiev fails to pay $1.95 billion by 10 am
Moscow time (6 am GMT).
The latest round of crunch talks ended
without an agreement late on Sunday night, with Gazprom reaffirming
its unyielding position, according to the gas firm's spokesman Sergei
Kupriyanov.
"The
Russian side expects a debt payment of $1.951 billion by 10 am [6 am
GMT] on June 16. If this sum isn't paid by then, gas deliveries to
Ukraine will be switched to a prepayment scheme, as it was announced
earlier," the Gazprom spokesperson warned in the wake of the
negotiations.
The
talks were attended by Gazprom CEO Alexei Miller, Ukraine's acting
Prime Minister Arseniy Yatsenyuk and EU Energy Commissioner Guenther
Oettinger. Oettinger remained optimistic about the outcome of the
meeting, despite Kupriyanov telling AFP the chance for another
Gazprom-Naftogaz get-together before the Monday deadline was rather
slim.
Russia,
Ukraine fail to find compromise at gas talks
Russia
and Ukraine failed to resolve a gas pricing dispute at talks for
Ukraine to settle $1.95 billion of gas debts, a spokesman for Russian
natural gas producer Gazprom said on Monday.
Spokesman
Sergei Kupriyanov said after talks in Kiev that Russia would switch
to an advance payment system if it did not receive the money, meaning
Moscow could cut off gas supplies to Ukraine.
Cutting
supplies could disrupt the gas flow to the European Union, reports
Reuters.
"The
talks in Kiev finished around 2:30 am Moscow time (22:30 GMT on
Sunday). The Russian side is expecting payment of the accumulated gas
debt of $1.951 billion before 10 am (06:00 GMT) on June 16,"
Kupriyanov said.
Russia
and Ukraine disagree how much Kiev should pay for the natural gas it
receives from Russia.
European
Energy Commissioner Günther Oettinger told reporters in Kiev that he
had made a compromise proposal during talks which began late on
Sunday but Moscow had declined the offer.
Prospects
of a breakthrough had dimmed because of political tensions and
clashes between government forces and pro-Russian separatists in east
Ukraine.
The CNN version of events
Russia cuts off natural gas supplies to Ukraine
Russian state-owned gas firm Gazprom says it has cut off supplies to Ukraine after negotiators failed to resolve a payment dispute before a key deadline expired.
CNN Money,
16
June, 2014
Representatives
from Ukraine, Russia and the European Union held meetings over the
weekend in an effort to avert the crisis, but no agreement was
reached.
Gazprom
said Monday that Ukraine's total debt is $4.5 billion. The
state-owned gas firm will now only deliver gas that Ukraine has paid
for in advance.
"At
this moment no payments for old debt or June were paid," said
Gazprom spokesman Sergey Kupriyanov. "All charts show zeroes."
Both
sides said they have filed claims with an international arbitration
court in Stockholm.
While
Gazprom hiked the price it charges Ukraine by about 80% to $485.50
per thousand cubic meters of gas in April, some concessions have been
offered during recent talks. Gazprom charged European countries an
average of $377.50 per thousand cubic meters in 2013.
The
gas dispute between Moscow and Kiev has escalated as relations
between the two countries have deteriorated.
Europe
and the U.S. have imposed sanctions on Russia for its annexation of
Crimea, while analysts have accused Russia of using natural gas
supplies as a political tool.
In
recent weeks, violence has again flared in eastern Ukraine as
government forces clashed with pro-Russian militants. The military
conflict was clearly having an effect on gas negotiations.
"We
will not subsidize Russian Gazprom (sic)," Ukrainian Prime Minister
Arseniy Yatsenyuk said Monday. "Ukrainians will not take out of
their pockets $5 billion annually for Russia to use this money to buy
weapons, tanks and jets and bomb Ukrainian territories."
Europe
relies on Russia for more than 30% of its gas, and half of that is
pumped through Ukraine. Analysts worry that a disruption in supplies
to Ukraine could hurt European companies and households.
Kupriyanov
said Monday that "gas designated for European consumers is
flowing in full accordance with the contract's figures."
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