‘Every penny paid’: Ukraine PM confuses gas debt repayment with Eurobonds pay-off

Ukrainian Prime Minister Yatsenyuk’s statement that $1.67 billion was transferred as part of the country's gas debt payment actually refers to the repayment of Eurobonds which Ukraine’s Naftogaz received under state guarantees, Russia’s Gazprom says.

Arseny Yatsenyuk made the statement live on-air on Ukraine's “First” TV channel, specifically stating that the recent payment was connected to “gas debt.”

“They [Russia] hoped that we will not pay off our gas debts. The day before yesterday, we paid every single penny of the [US$]1.67 billion debt,” Yatsenyuk stated.

But Gazprom spokesman Sergey Kupriyanov did not confirm receiving any money from Kiev, TASS reported. Kupriyanov added that he believes Ukraine’s prime minister was talking about Eurobonds.

“It is hard to imagine that the payment for gas went through before the agreement was signed,” Kupriyanov said, referring to the final agreement between Ukraine and Russia that is not expected to be signed until next week.

September 30 was the maturity date of Eurobonds given to Naftogaz. The sum which Ukraine had to pay back equaled $1.67 billion.

Later on Saturday, the Ukrainian government posted a statement on its website clarifying that the amount paid by Ukraine was indeed for Eurobonds.

“The Government of Ukraine has paid off Eurobonds issued to Naftogaz under state guarantees,” the statement reads, quoting Yatsenyuk: “The day before yesterday Naftogaz’ $1.67 billion debt was repaid.”

The necessary funds for the payment came from international lenders, Yatsenyuk added.

Gas talks ongoing

On September 26, Russia, the EU, and Ukraine agreed on an energy plan in Berlin, which ensures that Russian gas deliveries to Europe through Ukraine will continue during the winter months and guarantees that Ukraine will start paying off its billions of dollars’ worth of debt to Gazprom.

EU Energy Commissioner Gunther Oettinger confirmed that Ukraine will pay Gazprom $3.1 billion by the end of 2014. This amount is still short of the $5.3 billion that Kiev currently owes Gazprom.

In return, Russia said it is ready to resume gas deliveries to Ukraine after Kiev pays $2 billion of its debt and makes a $1.9 billion advance payment for future supplies, according to Russian Energy Minister Aleksandr Novak.

Ukraine indicated that it is prepared to pay just $3.1 billion of its Russian gas debt. “They calculated the cost at their own virtual price at $268.5 [per thousand cubic meters of gas],” Novak said.

But Russia’s gas price is at $385, which amounts to $1.9 billion for the five billion cubic meters that Ukraine wants to purchase. The grand total, together with the debt payment, amounts to $3.9 billion.

The funds for this plan has already been provided to Ukraine by the International Monetary Fund (IMF).

Novak said the date for further talks will be set after October 7.

Earlier, Ukrainian Energy and Coal Industry Minister Yury Prodan went so far as to claim that Russia actually owes Ukraine $6 billion for “overpaying” for gas, stating that the $3.1 billion is not being considered a debt repayment, but instead is a pre-payment for the winter.

“We are ready to use the sum as gas payments. As a compromise, we offered and are ready to proceed with prepayments – that is if we are still talking about five billion cubic meters – it will be $1.9 billion and then have a final tally at the end of the month,” Prodan said.

Meanwhile, Ukraine is hoping that the Stockholm Arbitration Court will help Kiev get a discounted gas price from Russia. Its decision is expected in two to four weeks, Prodan said.

Russia switched Ukraine to pre-payment gas deliveries in June, following debt and pricing disputes.