Russia ‘open’ to gas price negotiations with Ukraine, if they start to repay debt
Russia will continue gas price negotiations with Ukraine on the condition that the country begins to pay off its massive $3.5 billion debt to Gazprom, Russian Prime Minister Dmitry Medvedev told journalists on Wednesday.
Gazprom, Russia’s largest natural gas producer, has currently priced Ukrainian gas at $485 per 1,000 cubic meters, after canceling two discounts. Kiev is complaining that the new price doesn’t reflect market conditions and is politically motivated.
"Of course it is possible. It's a question for negotiations,” the Prime Minister said in a question and answer session with reporters.
“We hope our European friends will force Ukraine to begin to pay ‘Gazprom’ using a portion of the money it has received,” Medvedev said, in reference to the $3.2 billion tranche of aid it received from the International Monetary Fund on May 7.
Aside from paying off Gazprom, Ukraine has other billions in debt obligations, as well as a nearly empty treasury and an ailing currency it needs to save.
Due to Ukraine’s late payment record, Gazprom has switched supplies to prepayment and sent Naftogaz, Ukraine’s national oil and gas company, a $1.66 billion bill that must be paid by June 2, or risk a shut off.
"Nobody ever said: hand over $4 billion straight away, rather [we said] show that you are ready to act … If they pay part of it, that's the minimum requirement for resuming talks," Medvedev told reporters.
Earlier it was reported Kiev would use some of its IMF money to start repaying Gazprom, but government officials haven’t made any concrete announcements about how the first tranche will be allocated
European Energy Commissioner Guenther Oettinger and Russian Energy Minister Dmitry Kozak will meet on May 19 in Berlin to discuss Ukrainian energy issues further. Oettinger has been a main player in brokering a deal between the two embittered nations, but so far negotiations have failed to produce any results.
Europe sources about one third of its total energy supply from Russia, 50 percent of which flows through Ukraine.
The Ukraine crisis has brought to light the impact shifting geopolitics are having on the global energy market. Europe continues to call for more energy independence from Russia, the US is toying with the idea of exporting shale gas, and Moscow and Beijing look poised to sign a landmark 30-year gas purchase agreement that would supply 38 billion cubic meters to China a year starting in 2018.
Russia will not say “no” to any partners in the energy sector, Prime Minister Medvedev said on Thursday at the International Energy Forum in Moscow.
“For Russia it is important to tell all of our partners - both Asian and European - that we will not refuse or say ‘no’ to anyone,” Medvedev said.
The Prime Minister said that Russia accounts for 20 percent of energy in the world.
