Ukraine May Lose Gas Price Discount over Debt to Gazprom

Russian Gazprom has threatened to revoke the gas price discount granted to Ukraine unless Naftogaz settles its debt.

Gazprom Spokesperson Sergey Kupriyanov announced Saturday that Ukraine could not keep the discount if it kept failing to fulfill its obligations, stressing that the price decrease had been granted on the condition of regular payments for gas supplies.

The outstanding debt of Ukraine's national gas company, Naftogaz Ukrainy, to the Russian energy giant amounts to USD 1.55 B.

Gazprom explained that there were no problems with the transit of Russian gas to Europe via Ukraine and that the quantities supplied in February 2014 had remained unchanged year-on-year, at around 13.1 billion cubic metres.

Moscow reminded Ukraine of its gas debt in January, with Naftogaz Ukrainy paying a part of the debt, USD 1.3 B, for gas deliveries in 2013.

However, the government announced that the regions where the administrative buildings had been occupied by opposition forces were not sending payments.

The gas price discount was granted to Ukraine in December 2013, after now-ousted President Yanukovych backed out of an EU trade deal in favour of closer ties to Moscow.

Under the deal, Kiev saw its gas prices drop by a third, to USD 268.5 per 1000 cubic meters from around USD 400 per 1000 meters.

Russia also granted Ukraine a loan of USD 15 B alongside the gas deal, but the aid has been frozen.

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