Gazprom gives Kiev extension in gas dispute

June 03, 2014 - 1:11:47 am

MOSCOW: Russia’s Gazprom gave Ukraine yesterday an extension into next week to resolve a gas price dispute at the heart of the two countries’ confrontation, a day before Moscow was due to switch off the gas unless Kiev paid in advance.

The argument over prices for natural gas has quietly simmered in the background even as the two countries have squared off over Moscow’s seizure of Ukraine’s Crimea peninsula and over a pro-Russian rebel uprising in eastern Ukraine. Since a pro-Moscow president was toppled in Ukraine in February, Russia has demanded a sharp increase in the price Ukraine pays for gas. Kiev says it cannot afford it and wants to pay a discounted price which it negotiated in the past.

While the dispute has gone on, Gazprom has continued billing Kiev at the higher rate. It says Ukraine already owes it more than $5bn in unpaid bills and is running up more debt at a rate of more than $1bn per month.

Moscow had previously threatened to switch off Ukraine’s gas as soon as tomorrow unless it began paying up front for supplies, a measure that could potentially have also hit European supplies shipped through Ukrainian pipes.

But after Kiev paid some of its gas debt, Gazprom announced a six-day extension of the deadline until June 9. Gazprom also said that it would not sue Ukraine’s gas supplier Naftogaz over unpaid bills during the coming week. “Payment for May should be done before June 9,” Gazprom CEO Alexei Miller said in a statement.

That means gas will continue to flow to Ukraine and Europe while President Vladimir Putin and other world leaders — including Ukraine’s new president-elect Petro Poroshenko — are in France this week for events commemorating the allied forces’ “D-Day” landings in Normandy during World War Two. The Kremlin has announced no plans for talks with Poroshenko or US President Barack Obama during Putin’s visit. Reuters