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Gazprom doesn’t want ‘gas crisis’ – CEO

Published time: March 13, 2014 16:08
Edited time: March 14, 2014 09:31
Alexey Miller (RIA Novosti / Igor Zarembo)

Alexey Miller (RIA Novosti / Igor Zarembo)

Russia’s biggest gas producer Gazprom said Thursday it doesn’t want a "gas crisis", and hopes Ukraine can pay its outstanding $1.8 billion debt.

“Yes, in Ukraine there is a deep political crisis, but they have to pay for gas. We find our actions towards Ukraine are completely loyal,” CEO Aleksey Miller, told reporters in Berlin, Germany.

Miller said that Gazprom doesn’t require prepayment of gas from Kiev in order to prevent its economy from collapsing, and a possible cut off in supplies to Europe. The CEO previously offered to give Ukraine's Naftogaz a loan of up to $3 billion to help cover its massive bill.

As of March 13, Ukraine has an outstanding debt of $1.8 billion. Miller has warned Russia may have to turn off deliveries through Ukraine if Kiev fails to settle its debt.

In 2006 and 2009 deliveries were disrupted in disputes with Ukraine, which took a financial toll both on the company and European customers. Last year Gazprom exported 86 billion cubic meters of gas through Ukraine.

State-owned Gazprom has been demanding payments from Naftogaz, Ukraine’s state oil and gas major since before the new year. The company is nearly bankrupt, and the new government in Kiev is considering privatizing the company.

Miller also said Ukraine’s tardy payment could have adverse effects on the company’s investment program.

Late payments forced the Russian gas major to cancel Ukraine’s discount on natural gas. The deal was reached in December 2013 with the Yanukovich-led government, and lowered prices from $400 per 1000 cubic meters to $265.50. Ukraine will now pay $368.50 per 1000 cubic meters.

South Stream.(Image from www.gazprom.com)

South Stream stays the course

Mario Mehren, a board member of Wintershall, Germany’s largest oil and gas producer, told reporters that political tension between the EU and Russia over Crimea won’t affect the route of the South Stream pipeline. This includes the scenario that the Autonomous Republic of Crimea becomes part of the Russian Federation, a decision that will be voted on in a March 16 referendum.

“The route is optimal, and we see no reason to change it,” Mehren said Thursday. Territory near Ukraine is too tectonically active, and building the pipeline through water is more technically difficult and dangerous. Re-designing the path would be “impractical” he said.

Wintershall has a 15 percent share in the South Stream project, and a 15 percent share in Nord Stream.

Comments (8)

 

Ivo Petrović 15.04.2014 15:54

Nobody will want your gas soon Gasprom. Nations just realized that this is the only one thing that Russia can treat them with. Renewable energy sources will change the situation soon.

 

Vido Dasler 22.03.2014 16:46

They should ask for advance payments in gold, or rubles only. That would be a good joke.

 

Anna Charles 14.03.2014 08:49

Energy supply is considered a priority debt in many parts of the West. Failure to pay results in disconnection from the supply.

Gaz prom could require payment in advance by installing hypothetical pre-payment meters to collect future payments and arrears from the Ukraine.

Many people are familiar with this pre-payment methodology in their own lives. If it is understood and it works on the household level, why couldn't a similar mechanism be rolled out at the state level?

View all comments (8)
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