Gazprom needs Ukraine’s Naftogaz to pay $1.66 bln in advance as part of new billing method

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Open Joint Stock Company Gazprom has told Ukraine’s Naftogaz that the company has changed to a prepayment method. Gazprom has already submitted an invoice for June, accoording to a contract that stipulates the supply of 114 million cubic meters of gas per day, Sergey Kupriyanov, official representative of Gazprom, told journalists. The full sum amounts to $1.659 billion (for 3.42 billion cubic meters of gas) which is based on the price of $485 per 1000 cubic meters of gas. The sum is in line with the annual gas supply stipulated by the contract, amounting to 41.6 billion cubic meters of gas.

“The debt of Naftogaz amounts to $3.505 billion, so there is a good reason to require prepayment from the Ukrainian company. Thus, we have submitted an invoice for June, following the contract that stipulates the supply of 114 million cubic meters of gas per day,” Kupriyanov said.

He also said that Naftogaz has to pay for gas till June 2 and which it will then receive in accordance with the prepayment.

Russian Prime Minister Dmitry Medvedev said on May 12 that a prepayment method doesn’t signify the cessation of supplies, but that the amount of supply would equal the amount of prepayment.

“Gazprom has the right to use a prepayment method,” Dmitry Medvedev said during a meeting with the company Head, Alexey Miller and Russian Minister for Energy, Alexander Novak.

“I think that Gazprom has tried everything it could to settle the issue. Gazprom has held negotiations with its Ukrainian partners, consulted me and Vladimir Putin. However, this hasn’t worked, that’s why we should act,” Medvedev said.

The Russian government knows that Ukraine has the money to pay for the gas. The Ukrainian government has received the first tranche of financial help from the IMF. “Ukraine has time to make a prepayment, thus showing that it intends to pay the debts,” Dmitry Medvedev said.

Gazprom may stop deliveries of gas to Ukraine in June

Russia’s energy giant Gazprom said Friday it will stop deliveries of natural gas to Ukraine if Kiev fails to pre-pay by June 2. According to Gazprom, Ukraine’s accumulated debt for previous deliveries totals $3.5 billion. Russia has said it will switch to advance payments in its gas supplies for Ukraine starting from June. “The Ukrainian side must pay for June deliveries by June 2,” Gazprom CEO Alexei Miller said at a meeting with Russian Prime Minister Dmitry Medvedev.

If Ukraine fails to pay for June deliveries, Gazprom will cut off gas supplies from June 3, Miller said. Russia’s state-owned Gazprom earlier said Moscow’s conflict with the coup-imposed authority in Kiev could potentially hamper Russian natural gas deliveries to Europe through Ukraine. The company said it feared Ukraine’s Naftogas could fail on its transport obligations, withholding some gas allocated for Europe for itself.

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