Accessibility links

Breaking News

Gazprom Says Ukraine Has Noncash Options To Pay Debt

Gazprom spokesman Sergei Kupriyanov
MOSCOW (Reuters) -- Crisis-stricken Ukraine may count its $2 billion debt for Russian gas deliveries against future fees for Russian gas transit to European customers, a Gazprom spokesman has said.

Russia and Ukraine are locked in a gas dispute, the fourth in four years, and the spokesman said there was a 50 percent chance Moscow could cut supplies to Kyiv from next year if Ukraine does not pay the debt.

"We are looking for ways to [avoid a supply cut], including prepayment for transit," Gazprom spokesman Sergei Kupriyanov told Echo Moskvy radio station. "I hope we will be able to [negotiate a settlement] in the remaining days."

Ukraine previously declined to accept the proposal. Russia currently pays Ukraine $1.70 to transit 1,000 cubic meters for 100 kilometers.

Kupriyanov said another option for Ukraine to pay its debt would be to hand back gas it had stockpiled in underground gas storages to help it survive the winter in the event Gazprom turns off the gas taps.

Ukraine's state firm Naftogaz says it has 17 billion cubic meters in storage, 22 percent of Ukraine's annual consumption.

Ukraine has been forced to accept International Monetary Fund (IMF) assistance as the global financial crisis bites.

Gazprom's Board Chairman Viktor Zubkov said the international lender faced increased risks.

"The IMF should review possible risks ... Ukraine should find the money [to pay gas debt] especially since they are getting a big loan from the IMF," Zubkov was quoted by ITAR-TAS news agency as saying.

Zubkov said Gazprom's board would convene on December 29 to discuss the situation. Prime Minister Vladimir Putin held a telephone conversation with his Ukrainian counterpart Yulia Tymoshenko on December 27, Interfax news agency reported.

Europe Watching

Kupriyanov's suggestion marked some softening of the line expressed by President Dmitry Medvedev, who chaired Gazprom's board during previous disputes. Medvedev said Ukraine should pay the debt "to the last ruble" and threatened it with sanctions.

European countries are watching the dispute nervously. A previous dispute in 2006 briefly disrupted Russian gas supplies to the entire continent in the middle of winter, when Ukraine suspended transit to Europe, sending up spot gas prices.

Gazprom's Chief Executive Officer Aleksei Miller wrote a letter to the firm's European customers warning them of possible supply disruptions because of the debt row.

Kupriyanov declined to reveal any details of the negotiations or say how much Gazprom wants Ukraine to pay for gas from next year but said the price will be higher than $179.5 per 1,000 cubic meters Ukraine is paying now.

Kupriyanov said Gazprom is ready to dump an intermediary firm RosUkrEnergo and move over to direct supplies once the debt is fully paid.

Moscow and Kyiv are trading accusations daily in the latest gas clash. Both countries feel the dire effects of the global financial crisis on their markets and economies and continue to argue over the size of the debt and payment deadlines.

Kupriyanov said Gazprom, which employs 400,000 people, plans no major job cuts next year because of the crisis and added that its $32.5 billion investment will help create new jobs.