Russia’s PM Medvedev urges immediate advanced payments for Ukrainian gas.

By bne IntelliNews May 13, 2014

Russia’s PM Dmitry Medvedev urged the head of Russia’s natural gas giant Alexei Miller to switch to advance invoicing Naftogaz Ukrainy for gas supplies immediately as of May 13. At the same time, Medvedev argued that Russian government knows that Ukraine already has the necessary financing in place to cover debt to Gazprom, namely the first tranche of IMF aid of USD 3.19bn.

Head of Gazprom Alexei Miller confirmed that gas supplies in June will be conditioned by the pre-payments received from the Ukrainian side.

Previously Russia’s Minister of Energy Alexander Novak reminded that the deadline set to repay the gas debt to Gazprom for May 7 was breached. Novak reiterated the position of president Vladimir Putin, saying that “Russia cannot bear the sole burden of the support of Ukrainian economy by means of gas discounts”.

At the same time Ukrainian position remains that the gas supplies will be paid only under just market pricing from Gazprom, voiced by the head of Ukrainian Energy Ministry Yury Prodan. The price set by Gazprom for Ukraine currently is USD 485 per 1,000m3 of gas, while Ukrainian side claims USD 268 price and is ready to contest that in court should it not change by May 28. Should the price of USD 268 be recognised, the Ukrainian side would repay the debt within 10 days, Prodan claimed.

Gazprom previously estimated that Ukrainian debt for gas amounts to USD 3.5bn, including the payment for June, which was not recognised by Ukraine. This number does not include penalties for unsupplied gas under take-or-pay supply contracts.

Vedomosti reports citing its sources in Naftogaz that Ukrainian side withdraws payments for April and May in order not to indirectly confirm the price set by Gazprom ahead of the international arbitrage. Experts and industry analysts surveyed by Vedomosti believe that current conflict with the payment risks distorting the transit of gas through Ukraine to Europe in June.

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