By ELENA MAZNEVA and DARYNA KRASNOLUTSKA
Ukraine said Russia cut natural gas supplies after demanding
fuel payments be made in advance, the first time shipments
have been affected in this years crisis in relations
between the two countries.
Russia is only providing enough gas to Ukraines
pipeline system to meet demand from European customers and
not the countrys domestic supplies, Ukraines
state gas company said. Russias OAO Gazprom said
earlier it hadnt received any debt payments from
Ukraine before a deadline at 10 a.m. Moscow time. Going
forward, Ukraine will receive only gas paid for up front.
The European Union, dependent on Russian gas piped through
Ukraine for about 15% of its supply, has been trying to
broker a deal to maintain shipments and overnight
negotiations in Kiev ended yesterday without a deal. A supply
cutoff may have less impact in the European summer, when
demand is lower and stockpiles higher.
Ukraine was ready for such developments, said
Ukrainian energy minister Yuri Prodan. We will provide
reliable supply of gas to consumers in Ukraine and we will
provide reliable transit to the Europe
European gas prices jumped the most in more than three months
on concern regional supplies may be disrupted. UK front-month
gas jumped as much as 8.8%, the biggest increase since March
3 and a record for the July contract, on the ICE Futures
Europe exchange in London.
Zero is paid, so zero will be supplied, Gazprom
spokesman Sergei Kupriyanov told reporters in Moscow.
The decision is made in line with the current supply
Gazprom is sending full volumes to European clients and
alerted the Europe
an Commission on possible
gas transit risks before todays decision, Kupriyanov
said. Ukraine owes $4.46 billion for gas already supplied,
The grid operator in Slovakia, where Ukrainian pipelines
arrive at the EU, said there was no reduction in gas pressure
or import volumes.
Stocks in EU gas underground storage sites are larger than in
in previous years and the region is able to cope if there are
disruptions, EU Energy Commissioner Guenther Oettinger, who
has been involved in the trilateral talks since they started
in May, told today a press conference in Vienna.
Russian negotiators rejected a compromise proposal, said
Oettinger, who has been involved in the trilateral talks
since they started in May.
Under the EUs last plan, Ukraine would pay its debt in
installments, with $1 billion paid immediately and the rest
by the year-end, according to Oettinger.
Ukraine must pay $1.95 billion to partially settle its debt
by the deadline, Gazprom said yesterday. The company
previously extended the payment deadline for Ukraine after
receiving $786 million for supplies delivered in February and
Ukraine refused to pay the rest of its debt demanding
market-based prices, which it says would be lower than
In April, after Ukraines Kremlin-backed President
Viktor Yanukovych was ousted in street protests, Gazprom
rescinded a gas discount it had previously granted Ukraine.
Russian President Vladimir Putin also stripped the Ukraine of
a 2010 export-duty reduction that it exchanged for a lease on
its Black Sea fleets port in Crimea, which Russia
annexed in March.
Ukraine was ready to accept the EU proposal of a price range
between $300 and $385 per 1,000 cubic meters, still above the
$286.5 that the country paid in the first quarter, Naftogaz,
the state gas company, said today. Gazproms final offer
was $385, the Russian company said last week.
Ukraine, which relies on Gazprom for about half its gas, is
able to survive without Russian fuel until the middle of
September as its current gas consumption almost matches
domestic output due to low seasonal demand and the stalling
of production at its chemical plants in the east, according
to Concorde Capital, a Kiev, Ukraine-based investment
Ukraine has been filling underground storage facilities
over the past few
months to provide a buffer in the event of disruption, Andriy
Kobolyev, CEO of Ukrainian gas company Naftogaz, said today.
We have time, he said.
an Commission, the 28-nation
EUs executive arm, said in a statement today that it
still aims to help broker an agreement that secures supplies