KIEV: Ukraine expressed displeasure yesterday with the terms of an EU-brokered compromise with Russia that could save Europe from seeing a part of its gas supplies cut as early as next week.
“What we are hearing now is you pay and then we talk,” Ukrainian Finance Minister Oleksandr Shlapak said a day after Europe’s energy commissioner reported that there was a “good chance” a compromise could be reached within days. “This does not suit us,” Shlapak said.
The two neighbours launched their third gas war in less than a decade after the ouster of a Kremlin-backed president in February and Ukraine’s decision to seek closer economic ties with EU states. Russia retaliated by hiking Ukraine’s gas price by 81 percent to $485.50 per 1,000 cubic metres — the highest of any of its European clients — and demanding a payment by next Monday of $5.17bn for debts and June deliveries.
Ukraine refused to pay anything and branded the price increase a form of “economic aggression” launched by Russia to regain control over its western neighbour. Europe imports 15 percent of its gas through Ukraine and has been keen to help find a compromise that could avert a repeat of 2006 and 2009 disruptions that damaged Russia’s reputation as a reliable supplier and prompted Brussels to seek ways to diversify supplies.
European Energy Commissioner Guenther Oettinger on Monday reported “relatively good progress” at talks in Berlin involving Russian Energy Minister Alexander Novak and his Ukrainian counterpart Yuriy Prodan.
Oettinger said a deal under consideration would see Ukraine pay Russia’s state energy giant Gazprom $2bn by Thursday out of money it received from the International Monetary Fund and other world lenders in the past few weeks.
Russia would then be ready to renegotiate the price of future deliveries. A $500m payment from Ukraine’s Naftogaz state energy company to Gazprom would follow on June 7 to cover a part of the bill for May. But Naftogaz said in a statement issued late Monday that the Berlin meeting “unfortunately produced no real progress”.
Oettinger said yesterday he remained “quite optimistic” despite Ukraine’s insistence that Russia commit itself to a lower gas price before any payments are made. “We need a connected strategy and so we will continue to negotiate to have some payments, to have constructive negotiations coming to a market-based price and having additional payments afterwards,” the commissioner said in Prague.
Ukraine has threatened to sue Russia in an arbitration court in Stockholm should no agreement between Gazprom and Naftogaz be reached by Thursday. “That is absolutely unacceptable,” Russia’s Energy Minister Novak said in Moscow. “If that happens, no agreement can be reached.” The argument is complicated by the different rates Moscow and Kiev are using to determine how much money is actually owed.
But Ukrainian Prime Minister Arseniy Yatsenyuk said this was irrelevant because Russia had broken all conventions by seizing its Black Sea peninsula of Crimea in March. Crimean waters contain largely-untapped natural gas fields that the local authorities confiscated from Kiev within days of declaring their allegiance to Russia. Yatsenyuk put the value of those fields at $1bn and said he expected Russia’s compensation for them to be a part of any final agreement. AFP
