Russia has halted supplying unpaid-for gas to Ukraine as a deadline for Kiev to pay its debt passes without a payment, Russian energy giant Gazprom says.
Gazprom’s spokesman Sergei Kupriyanov said Monday the decision was taken as Ukraine had paid nothing of its debt by the 06:00 GMT deadline, adding that, as of now, Moscow has no legal grounds to supply gas to Ukraine.
Moscow had demanded that Kiev make a USD 1.95-billion payment of its debt before the Monday deadline.
Kupriyanov added that, in full accordance with the existing contract, it switched Ukraine’s Naftogaz company to a system of pre-payment for gas supplies, saying that the change was based on the Ukrainian gas provider’s “chronic non-payment.”
In addition, Russia warned Europe of possible supply disruptions if Ukraine drains off gas from its supplies. Ukraine is a key transit route for energy flows to Western Europe.
Furthermore, Moscow announced that it has turned to an arbitration court in the Swedish capital, Stockholm, “to sue Ukraine’s Naftogaz for USD 4.5 billion (3.3 billion euros)” in a bid to recover the debt.
The developments come as the two sides failed to reach an agreement during EU-mediated talks in the Ukrainian capital, Kiev, on Sunday.
Ukraine has rejected Russian President Vladimir Putin’s offer of the “final price” of USD 385 per 1,000 cubic meters, saying it would pay USD 326. Kiev has refused to pay for natural gas upfront as a protest to Russia’s decision in April to almost double gas prices. Gazprom raised the price of gas for Ukrainian consumers to USD 485 per 1,000 cubic meters from USD 268 for the first quarter of 2014.
Ukraine says Kremlin increased the price after former Ukrainian President Viktor Yanukovych was ousted in February. Kiev calls the move politically motivated, but Russian authorities reject the claim.
Russia provides about half of Ukraine’s and 30 percent of Europe’s total gas demand through major pipelines in the Ukrainian territory.