The situation in Ukraine continues to deteriorate as it increasingly becomes about gas supply to Ukraine and for the rest of Europe. The supply monopoly of Russian energy giant Gazprom has been used as leverage in the crisis at the expense of the local population. The newest escalation threatens a supply cut if prepayment is not received going forward. It is important to remember that Gazprom did not receive payment for April.
Russia’s state energy giant Gazprom warned on Monday that it may halt natural gas shipments to Ukraine on June 3 in a move that could impact the supplies of at least 18 EU nations.
Gazprom chief executive Alexei Miller said Ukraine must pay upfront for its June deliveries because of outstanding debts. He added that Kiev had until the morning of June 3 to make the payment “or Ukraine will receive zero cubic metres (of gas) in June,” Interfax reported.
The fact is that Ukraine has been receiving a large discount and it is now ending as a result of unpaid 2013 and 2014 supply.
“This follows Ukraine’s default on its obligation to repay its debt for gas supplies in 2013 and the 100 percent lack of payment for current supplies,” Gazprom chief Aleksey Miller said Tuesday. Gazprom had until April 10 to decide on a new price.
Ukraine, which imports about half its natural gas from Gazprom, owes the company $1.7 billion for gas that has already been delivered in 2013 and 2014.
The Russian government and Gazprom had announced they would stop providing Ukraine with a 33 percent discount after the first financial quarter of the year.
Transit fees for gas moving through Ukraine will also be bumped up 10 percent following an agreement reached in 2009.
A different reported by Bloomberg amount was said to be an 81% increase.
Gazprom raised the price it charges Ukraine for gas by 81 percent in April, to $485 per 1,000 cubic meters, more than any EU member pays.
From the same article, Bloomberg notes the significant amount owed.
Russia is moving Ukraine to prepayments because it owes $3.51 billion for fuel delivered in 2013 and through April this year, Miller said today.
State and corporate interests aligned?
Tomorrow, OAO Gazprom (GAZP) will send Ukraine a bill for June, Chief Executive Officer Alexey Miller said today at a meeting with Russian Prime Minister Dmitry Medvedev. If the bill isn’t paid by June 2 the neighboring country won’t receive any Russian gas from 10 a.m. the next morning, Miller said.
“It’s time to stop coddling them, notify them tomorrow and move to pre-payments,” Medvedev said during the meeting. “I think that all possible ways to settle this situation using other measures were undertaken by Gazprom.”
This is ironically just in time for the May 25th elections for central control in Kiev.
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