No Money, No Gas

Gazprom has confirmed the suspension of gas supplies to Ukraine from 10:00am MSK on July 1. Russia’s gas monopoly will not supply gas to Kiev without prepayment, no matter what price, said company CEO Aleksey Miller on Wednesday.

After trilateral Russia-EU-Ukraine gas talks in Vienna failed on Tuesday, Ukraine’s Naftogaz reported it would cease purchases of Russian gas starting from Wednesday as it didn’t agree on the price. The three parties gathered in Vienna to discuss the terms of the gas deal for the next three months as the previous ‘summer package’ expired.

The Ukrainian company stressed that Kiev would continue gas transit to Gazprom’s customers in Europe “in accordance with the existing transit contract”.

Russia offered Ukraine a discount of $40 per thousand cubic meters on Monday. The price of Russian gas with the discount was $247.18 per 1,000 cubic meters. The same price Ukraine bought gas in the second quarter.

However, Naftogaz refused to sign the deal, saying Kiev was dissatisfied with the price and the discount.

Ukraine’s wish to get more than a 40 percent discount is “groundless”, Russia’s Energy Minister Aleksandr Novak told Rossiya 24 TV channel on Wednesday.

The $100 discount Kiev is asking for, worked when the price neared $495 per 1,000 cubic meters, said Novak.

Ukraine’s decision to halt gas purchases from Russia is politicized, not justified by economic reasons, he added.

Last week, Russian President Vladimir Putin said Moscow could no longer provide generous gas discounts to Kiev due to low crude oil prices in the world.

On April 1, 2015 Russia and Ukraine signed a ‘summer package’, deal on gas supplies for the second quarter. The agreement replaced a similar ‘winter package’ signed at the end of October, 2014.

Russia switched Ukraine to prepayment terms last summer after the country’s ‘chronic’ failure to pay its massive debt. Naftogaz paid Gazprom $247.18 per 1,000 cubic meters of gas. The price included a $100 discount.

Reprinted from Russia Today.