EU Gas Industry, Russia Discuss Gas Dispute; Ukraine Ready to Pay $4 Billion By End of May

EU Gas Industry, Russia Discuss Gas Dispute; Ukraine Ready to Pay $4 Billion By End of May

On Wednesday, the European Union gas industry and Russia met in Brussels to discuss the ongoing conflict between the EU, Russia, and Ukraine over gas and energy. Not much was accomplished, but Eurogas President Jean-Francois Cirelli stressed the importance of dialogue and obligations.

“Quite simply there is an obligation from the Russian side to supply Europe and there are obligations from the Ukraine side to allow transit. It is paid for that. What we are asking from the European gas companies’ point of view is just respect that obligation,” he said.

Gas and energy are another reason for the high tensions between Europe, Ukraine, and Russia. Moscow and state owned gas company Gazprom have thrown threats of cutting supplies and raising gas prices to Ukraine and Europe since Kyiv ousted Russia-backed President Viktor Yanukovych on February 22.

Europe receives about one third of their total gas supplies from Russia and the majority of the pipelines run through Ukraine. This means Europe’s supplies could be in trouble if Gazprom cuts off gas to Ukraine. Gazprom already raised the price of gas to Ukraine and told Kyiv the gas will be shut off if a $4 billion debt is not paid off. Russian Prime Minister Dmitry Medvedev said Moscow will discuss gas prices with Ukraine if Kyiv pays some of their debt.

“Nobody ever said: hand over $4 billion straight away, rather (we said) show that you are ready to act … If they pay part of it, that’s the minimum requirement for resuming talks,” he told reporters.

On Thursday, Ukraine’s Deputy Energy Minister Ihor Didenko said Ukraine is ready to pay $4 billion for gas by the end of May. However, he said Kyiv calculated the cost as $268.5 per 1,000 cubic meters. Gazprom raised the price to over $400 per cubic meter.

“The Ukrainian side has clearly said that if the price of $268.5 is fixed, then Naftogaz is ready to pay before the end of May a sum of around $4 billion,” Didenko told a news conference.

Economic Development Minister Pavlo Sheremeta said Ukraine is ready to discuss natural gas prices with Russia.

“We are open to discussion (with Russia). We want to discuss the gas price. We want to discuss the gas debt,” Sheremeta said on Thursday at the annual meeting of the European Bank for Reconstruction and Development in the Polish capital.

Russian President Vladimir Putin told the EU to work with Ukraine to relieve the gas debt.

“The Russian Federation is still open to continue consultations and work together with European countries in order to stabilize the situation,” Putin said in a declaration to foreign leaders.

“We also hope that the European Commission will more actively engage in the dialogue in order to work out specific and fair solutions that will help stabilize the Ukrainian economy.”

Putin previously pushed the EU to help Ukraine pay off the gas debt, but made subtle hints that Europe’s gas supplies would be affected if the debt was not paid. The EU attempted to call Russia’s bluff by pointing out Europe is Moscow’s biggest customer and the countries will find gas elsewhere. Putin quickly backed down.

Russia and the European Commission agreed to meet again on May 19 in Berlin.