Russia is ready to negotiate on gas if Ukraine starts paying

The Russian side is ready for negotiations on the price of natural gas for Ukraine and payment conditions, if Ukraine will repay at least a part of its debt for gas, Interfax reported on May 14 citing PM Dmitry Medvedev. “If they repay a part, this will be, at least, a basis for talks” Medvedev said adding that Russia is ready for concessions in gas issues which he interpreted as “financial aid”.  

The total debt of the Ukrainian side for Russian gas supplied until the end-April 2014 is USD 3.51 bln, according to Gazprom estimates. A day before, Russian Gazprom had demanded that Ukrainian Naftogaz prepay USD 1.66 bln for gas to be supplied in June. On top of that, a bill for May supplies of Russian gas to Ukraine may reach USD 1.8 bln, based on the Gazprom-demanded price. The Ukrainian side is insisting that the price which Gazprom wants to charge for gas supplied after 1Q14 (USD 485.5/tcm) is not fair, and it is insisting on a USD 268.5/tcm price. As the price for 2Q14 has not been agreed upon, the Ukrainian side recognizes only a USD 2.24 bln debt to Russia, for gas imported until the end of March 2014.

In other news, Interfax reported that energy ministers of Russia and the EU are going to discuss Ukrainian gas issues. They are going to meet in Berlin on May 19 to agree on a new tri-lateral meeting involving the Ukrainian side. The previous talks of the three sides, convened in Warsaw on May 2, were fruitless. 

Alexander Paraschiy: good news is that Russia has expressed its willingness to provide “financial aid” to Ukraine – by offering a discount for Russian otherwise expensive gas. The Naftogaz’ tactic to import as much gas as possible in April and May, with no intention to pay for it, apparently annoys the Russian side very much. As we expected, the more Naftogaz owes to Gazprom, the more the Russian side is willing to negotiate on gas issues. We, therefore, expect that a new possible meeting on gas issues will be effective. We expect significant concessions from the Russian side on pricing at this meeting.