Putin expects more active EU role in solving Ukraine gas debt problem

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Russia is disappointed by the absence of specific proposals from the European Union on solving Ukraine’s gas debt  problem and expects European countries to play a more active role in the process, said President Vladimir Putin on Thursday. In a special address to European leaders, Putin said that Russia’s decision to demand advance payment for natural gas deliveries to Ukraine was a forced measure.

“In early April, we came up with a proposal to hold immediate consultations with the aim of elaborating coordinated actions to stabilize the Ukrainian economy and ensure stable Russian gas deliveries and transit, in compliance with contract terms,” Putin said in his letter.

Since then, Russia has held consultations in Moscow with some non-EU countries, at which “our partners fully shared our concerns over Ukraine’s payments for gas delivered by Russia and the risks of insufficient amounts of gas pumped into Ukraine’s underground storage facilities (to ensure uninterrupted gas transit to Europe),” Putin said.

“As for EU member countries, only one meeting was held in Warsaw during this period with a delegation led by EU Energy Commissioner (Gunther) Oettinger with the participation of a Ukrainian representative (Energy Minister Yuriy) Prodan,” Putin said.

“Unfortunately, we have to state that we have not received any specific proposals from our partners on stabilizing the situation with the fulfillment of contractual obligations by the Ukrainian buyer and ensuring reliable gas transit,” Putin said.

The Russian president said that “over this time the situation over payment for Russian gas had only deteriorated” as Gazprom had received no payment for gas delivered to Ukraine.

“Ukraine’s overall debt has grown from $2.237 billion to $3.508 billion,” Putin said. “The debt grew despite the fact that the Ukrainian side had received the first $3.2 billion loan tranche from the IMF,” Putin said.

“In this situation, the Russian side issued a bill for gas prepayment from June 1 in strict compliance with the contract and will make gas deliveries in amounts prepaid by the Ukrainian side,” Putin said.

“I would like to emphasize once again that this is a forced decision. The Russian Federation remains open to the continuation of consultations and for joint action with European countries for normalizing the situation,” Putin wrote in his letter.

Russia forced to supply gas to Ukraine upon prepayment only – Putin

There was no choice over the decision to demand pre-payment from Ukraine, and Moscow is prepared for dialogue to normalize the situation, said Russian President Vladimir Putin. “I would like to point out once again. This (transition to a pre-payment system) is a forced one,” he said in a message distributed by the Kremlin’s press-service. Ukraine’s gas debt has rocketed to $3.508 billion from $2.237 billion over a month, added the President.

“Russia remains open to further consultations and joint actions with European countries for the sake of normalizing the situation,” Putin said.

“We hope for a more active dialogue on the part of the European Commission designed to work out specific, fair decisions to stabilize the Ukrainian economy,” Putin emphasized.

“Very sadly, we have to state that we did not receive from our (Western) partners any detailed proposals on how to stabilize the performance of our Ukrainian customer on its contract obligations and to ensure reliable transfers,” Putin said.

Russia’s Energy Minister, Alexander Novak, earlier stated that Russia does not see that Ukraine has any ability to pay for natural gas supplies, even if a discount is provided, due to the economically complicated situation in the country.

He added that the Russian side does has no guarantees that Ukraine will be able to pay for gas supplies even with a discount.

“We do not have guarantees that even if a price of $100 is set, these bills will be paid by the Ukrainian side. What we see today is complete insolvency,” the minister noted.

Ukraine’s gas debt

Since the beginning of May, Ukraine’s Naftogaz has acquired 1.350 billion cu. m of Russian gas. In April, Ukraine has imported 2.7 billion cu. m, according to Gasprom.

To date, the outstanding debt of Naftogaz amounts to $3.508 billion, therefore “no one has a doubt that this is a substantial and non-biased reason for applying the relevant paragraph of the contract on prepayment,” Kupriyanov said May 13.

“If you buy natural gas, you should pay for it. All gas companies have specific payment conditions,” said Gertjan Lankhorst, head of International Gas Union, commenting on the issue of Nagtogaz’s nonpayment for Russian gas, its debt and the switch to prepayment mode. He believes that the switch to prepayment mode “may be more difficult for the client in terms of payments.”

“If as a result of that, consumers will not receive gas, this would surely affect Ukraine, and, I’m afraid, Europe as well,” Lankhorst said.

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