Thursday, August 28, 2014


Russia

Gazprom Raises Gas Price For Ukraine

A pressure gauge at an underground gas storage facility in the Ukrainian village of Mryn.
A pressure gauge at an underground gas storage facility in the Ukrainian village of Mryn.

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Russia's state-controlled gas giant, Gazprom, has announced that it is increasing the price of natural gas for Ukraine to $385.5 per 1,000 cubic meters in the second quarter from the previous rate of $268.5. 

Miller said the "December discount" for gas could not be extended and cited Ukraine's failure to pay debts for 2013 and make full payments for current deliveries.

Gazprom's chief executive officer, Aleksei Miller, said in Moscow that Ukraine's debt for unpaid gas bills stood at $1.7 billion as of April 1. 

Ousted Ukrainian President Viktor Yanukovych reached the deal for discounted gas at a meeting with Russian President Vladimir Putin in December shortly after Yanukovych had suspended talks with the European Union on an Association Agreement and turned to Russia for economic help.

The gas agreement was subject to a quarterly review.

The deal was effectively nullified once Yanukovych was ousted following months of protests and a pro-Western government came to power at the end of February. 

Prior to the Putin-Yanukovych deals in December, Ukraine was making progress in finding new sources for energy imports and signing deals with foreign companies to develop domestic energy resources.

Many of those agreements were delayed or canceled after the Yanukovych-Putin deal in December, leaving the new authorities scrambling now to revive and renew those earlier agreements. 

Renegotiating those deals promises to be difficult owing to the uncertainty in Ukraine currently.

Gazprom's decision to raise the price by more than 40 percent puts an added burden on Ukraine's already troubled financial situation.

Ukraine already raised the price of gas for its customers by 50 percent last week to meet a key loan condition from the International Monetary Fund (IMF).

The European Union is watching events between Gazprom and Ukraine closely. 

The EU fears bad ties between Russia and Ukraine could lead to a repeat of the January 2009 crisis when Kyiv and Moscow were in a dispute over gas prices that resulted in reduced supplies of gas to countries in central and east Europe.
 
Based on reporting by Reuters, AFP, and ITAR-TASS

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