Contracted gas volumes not trigger for new new Ukraine gas dispute

Gazprom’s position on payment for contracted gas volumes will not trigger a dispute with Naftogaz of Ukraine this winter, warming the outlook for European consumers dependent on uninterrupted supplies of Russian gas.

The Russian gas giant’s position with European consumers is that where they contract for specific volumes then they should take these and pay for them. That currently sees European firms owing an estimated $2.5 billion for gas, which they have contracted for, but haven’t needed over the course of this year, with demand slashed by the economic downturn.  

However speaking with RT’s Al Gurnov, Gazprom spokesman, Sergey Kupriyanov, confirmed the issue will not trigger a gas dispute this year with the Russian monopoly exporter to forego revenues of at least $1.3 billion in the wake of the recent agreement signed off between Prime Minister Putin of Russia and his Ukrainian counterpart.

“It depends on how you make calculations. If we take the minimum annual amount of gas that Naftogas could have purchased from us in 2009 and compare it to what happens in reality, what we have is, we expect annual sales to reach 26.6 billion cubic metres, while we were supposed to sell 32 billion at the very least. With this years average price being $236 U.S. dollars per thousand cubic metres we get an amount of $1.3 billion U.S. dollars. And this does not include any penalties and actual amounts – it’s the bottom figure.”

Acknowledging that with the Ukraine economy in dire straits it would be nearly impossible to impose penalties for previously contracted gas volumes, Kupriyanov stated that the issue of 2009 contracted volumes had already been resolved and added that they were unlikely to be an issue for Ukraine in 2010.

“This issue has been resolved for 2009. As for 2010 the amounts we’ve agreed practically bring this risk probability down to zero percent. And we have agreed officially that the agreements we have for now do not apply to any future period, including year 2011 and so on, as our contract is a long term one with a contractual period of 11 years.”

The news comes on top of the confirmed payment for November gas by Naftogaz, pushing the prospect of another gas war further away, despite the parlous finances of Ukraine.