Gazprom Issues Ukraine Extension to Pay Gas Debt

Gazprom Issues Ukraine Extension to Pay Gas Debt

Russia’s gas giant Gazprom decided to give Ukraine an extension to resolve the gas dispute between the countries after Ukraine’s Naftogaz paid $786 million for February and March supplies. Russia was going to turn off Ukraine’s gas on Tuesday.

Gazprom and Russia have used gas as a political tool against Ukraine and Europe since Kiev ousted Russia-backed President Viktor Yanukovych on February 22. At first, the company threatened to cut off Ukraine’s gas, scrapped a discount price, and demanded the debt to Gazprom and Russia be paid off.

The European Union is involved with the talks because Europe receives gas from Russia and the majority of the pipelines run through Ukraine. If gas is shut off to Ukraine it could affect Europe’s gas supply. EU Commissioner Guenther Oettinger told Moscow that Gazprom must set a fair price for Ukraine. The new price at $485 per 1,000 cubic meters is the highest for any Gazprom customer while Europe pays between $300-$400.

Gazprom CEO Alexei Miller, who is also a very close friend of Russian President Vladimir Putin, said new shipments could cost up to $5.2 billion.

The extension is until June 9, which will be a few days after the 70th anniversary of the historic D-Day landings in Normandy, France. Putin will join British Prime Minister David Cameron, President Obama, French President Francois Hollande, and German Chancellor Angela Merkel. Ukraine’s new president Petro Poroshenko will also be in attendance, but the Kremlin said Putin will not meet with him.