Wednesday, September 17, 2014


Ukraine

Russia Demands $7 Billion From Ukraine For Gas

According to Ukraine, it is being penalized for not buying enough gas.
According to Ukraine, it is being penalized for not buying enough gas.
By RFE/RL's Ukrainian Service
A spokeswoman for Ukraine's state oil and gas company, Naftohaz, told journalists on January 28 that Russia's Gazprom has demanded that Kyiv pay $7 billion for using less gas than promised. 
 
Olena Yuryeva said Naftohaz received a bill from Gazprom claiming Ukraine did not buy the full amount of natural gas as required under a deal between the two countries. 
 
Gazprom has not commented on reports of the huge bill.
 
Independent Ukrainian energy expert Oleksandr Narbut told RFE/RL's Ukrainian Service the bill is beyond the ability of Naftohaz to pay.

"In order to pay, one has to have money. As far as I understand, Naftohaz doesn't have that kind of money. Furthermore, the financial situation of Naftohaz has deteriorated constantly, particularly for the past three years," Narbut said.
 
A 10-year contract on natural gas deliveries was signed in 2009 by Ukraine's then-prime minister, Yulia Tymoshenko, and her Russian counterpart, Vladimir Putin.
 
Tymoshenko is currently serving a seven-year prison term for an abuse of office conviction connected to the natural gas contract with Russia. 
 
The deal came as both countries faced pressure from European states that saw their Russian gas supplies severely reduced and in some cases suspended entirely as the Russian-Ukrainian dispute stopped the flow of gas westward through Ukrainian pipelines. 
 
Deal With Germany

According to the contract, Kyiv agreed to buy 33.3 billion cubic meters of natural gas each year. 
 
In 2012, Ukraine bought only about 25 billion cubic meters. 
 
Yuryeva said Ukraine had informed Moscow repeatedly during 2012 about the reduced need for Russian gas.
 
Ukraine's Energy Minister Yury Boiko said on Ukrainian television last November that his country would only purchase up to 26 bcm of Russian gas and added that Ukraine had a deal with Germany to purchase gas from Germany for $40 to $70 cheaper than Gazprom's price.
 
Ukrainian officials have complained that the approximately $400 per 1,000 cubic meters of gas Gazprom charges is too high a price to pah.
 
It was unclear why Gazprom would demand $7 billion for the gas Ukraine did not use, a price that is approximately twice that of the gas Ukraine did not use.
 
Boiko conceded in his November interview that Ukraine's reduced need for gas could lead to Russia taking Ukraine to an international court.
 
Simon Pirani of the Oxford Institute for Energy Studies pointed out Russia has forgiven Ukraine's debt for unused gas previously but Gazprom is not obligated to do so and in the case of European customers has insisted on payment for contracted gas.

"If you look at Gazprom's negotiations with its consumers in large European countries -- in Germany, in Italy, and in France, even in Turkey -- in all these cases since the economic crisis began in 2009 there have been very similar problems and Gazprom has threatened to levy these sort of penalties," Pirani said.

"It's not a fine, it's a penalty that is provided for in a contract. The party in the contract that's buying the gas agrees that they'll buy a certain amount and that if they don't they will pay the difference. It's a take-or-pay clause, it's a standard clause in any gas contract."

A report in the "Financial Times" on Gazprom's $7-billion demand on Ukraine claimed the Gazprom bill arrived in Ukraine just hours before Ukraine signed a deal with Royal Dutch Shell to explore for shale gas in Ukraine.
 
Ukraine is believed to have some 1.2 trillion cubic meters of shale gas.
 
With reporting by UNIAN and ITAR-TASS 
 

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