Russia and Ukraine Bluster Over Gas Supply 

2008-12-19 10:13

 


ZHANG:
The Russian gas export company Gazprom geared up for a new confrontation with Ukraine yesterday. Gazprom is ready to cut off its neighbour from oil and gas next month if it doesn't make its back payments by the end of December.

STORY:
Gazprom says the arrears must be settled as talks proceed on a supply and pricing agreement for 2009.

[Sergei Kupriyanov, Gazprom Press Secretary]:
"In case arrears are not met, which is obvious today, and there's no solution other than cash payment, we will not be able to sign a new contract. This would mean there will be no legal grounds for us to supply gas to the Ukrainian consumers as from January 1."

In Kiev, President Viktor Yushchenko said Ukraine had already paid $800 million US dollars as part payment for the arrears and a further $200 million US dollars would be paid soon. Yushchenko said the debts accumulated after Ukraine company Naftogaz pumped large amounts of gas into storage areas to guard against shortages to consumers.

Ukraine has faced substantial annual increases in the price it pays for gas imported from Russia, even so the 2008 price is considerably below the European market rates.

In talks with Russia, Ukrainian Prime Minister Yulia Tymoshenko agreed on gas prices rising to market levels over three years.

But Gazprom has threatened to push up the price to $400 US dollars next year if arrears remain unpaid.

Tymoshenko says the talks are being hindered by rows over her demand to eliminate intermediary companies from the gas trade between the two countries.