Gas talks between Ukraine and Russia collapsed on Friday and Ukrainian Prime Minister Arseniy Yatsenyuk told the country to prepare for gas cuts on June 16. Russia gas giant Gazprom told Ukraine that gas will be cut off on June 16 if no deal is reached and Ukraine does not pay any debt.
The talks began last week and were mediated by the European Union’s Energy Commissioner because if Ukraine loses gas it will affect Europe. More than half of the gas pipelines from Russia to Europe go through Ukraine. The Russian Energy Ministry told Reuters there are no plans to hold talks before June 16 even though the Energy Commission hoped for another try.
In the latest round, Ukraine told Russia it can pay a compromise price for 18 months to allow more time for talks. Andriy Kobolev, Chief Executive of Ukraine’s state company Naftogaz, said Ukraine would pay off their $1.9 billion debt if Russia accepts the price of $326 per 1,000 cubic meters. The Energy Commission set the price, even though Ukraine believes the price is still too high. Now Yatsenyuk told companies to prepare for a shutdown. From Interfax-Ukraine:
Ukrainian Prime Minister Yatseniuk has instructed relevant ministries, the management of Naftogaz Ukrainy and regional state administrations to switch to the plan of the power industry functioning without Russian gas supplies starting from June 16, the government’s press service reported.
Naftogaz Ukrainy and the justice minister of Ukraine have been instructed to complete the procedure of preparing to defend Ukraine’s interests in relations between Naftogaz and Gazprom in the Stockholm Arbitration Court, the press service said.
After Ukraine ousted Russia-backed President Viktor Yanukovych on February 22, Gazprom cancelled a generous price cut at $268 and raised the price to $485. On Wednesday, Russian President Vladimir Putin offered to slash the price to $385, but Yatsenyuk called it a trap and did not accept the offer.