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Ukraine halts Russia gas payment

April 12, 2014

Ukraine's state-run energy company Naftogaz has called recently-raised Russian prices for natural gas unjustified, saying it has halted payments until rates can be negotiated. Naftogaz was already behind on its payments.

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Symbolbild Russland Ukraine Gaslieferung
Image: picture-alliance/dpa

The chief executive of Naftogaz addressed his company's outstanding Russian gas bills in the domestic press on Saturday, claiming that payments were suspended until Kyiv and Moscow could agree to new prices.

Andriy Kobolev said it was unjustified and unacceptable that Ukrainian gas prices had risen from the discounted rate of $268.5 (193.3 euros) per 1,000 cubic meters to around $485 per 1,000 cubic meters.

"Accordingly, we have suspended payments for the period of the price negotiations," Kobolev was quoted as saying in an interview with Ukraine's Zerkalo Nedely newspaper. Naftogaz was already behind on its Russian bills, but had not formally announced a suspension of payments.

Typical natural gas prices for European countries stand between $370 and $380 per 1,000 cubic meters - Ukraine's former government under President Viktor Yanukovych enjoyed a discounted rate.

Key transit country

Russia's Gazprom and President Vladimir Putin had already raised the issue of non-payment from Ukraine this week. On Thursday, Putin was quoted as saying he was "extremely concerned about the situation surrounding Ukraine's gas debt and the transit of gas to Europe." Gazprom put the total outstanding debt at $2.2 billion, saying Naftogaz had also missed the deadline for its March installment.

A large proportion of EU natural gas imports from Russia is pumped through Ukraine. In 2009, Russia stopped gas deliveries to Ukraine over unpaid bills, leading to some shortages elsewhere on the continent. The disruptions lasted just under two weeks. The US said one day after Gazprom first announced revised Ukrainian prices that it would help seek alternative sources of fossil fuels for the Russian neighbor.

Relations between Kyiv and Moscow have been pushed to breaking point, first by the unrest that led to a change of government in Ukraine, and then by the Crimea's contentious breakaway to join the Russian Federation.

msh/ng (AFP, Reuters)