Ukraine Rejects Russian Offer as Gas Talks End Without Deal (1)
By Ewa Krukowska, Elena Mazneva and Volodymyr Verbyany
June 11 (Bloomberg) — Ukraine rejected a Russian proposal
for the price of future natural-gas deliveries as European
Union-brokered talks in Brussels ended without an agreement.
Russia offered to supply gas for about 20 percent below the
current price, a level Ukraine said was still more than it’s
willing to pay, EU Energy Commissioner Guenther Oettinger said
at a press conference after the three-way meeting. Russia’s
energy minister said the country also wants $1.95 billion for
past fuel supplies before June 16 or it may cut shipments.
“In the next 48 hours we’ll try to make progress, not
waste time,” Oettinger said. “Monday is quite a way off so
there’s still a good opportunity.”
The EU, dependent on Russian gas piped through Ukraine for
about 15 percent of its supplies, is trying to broker a deal to
maintain shipments amid a dispute over payments for the fuel. In
Ukraine, government forces and rebels claiming allegiance to
Russia continue to clash in the east of the country.
Oettinger is optimistic an agreement can be reached to end
the gas price dispute in the next few days, he said at the press
Russia proposed a “compromise” package, supplying Ukraine
with fuel for $385 per 1,000 cubic meters, $100 below the
current price, Novak said. That discount is similar to what
Russia granted Ukraine from 2010 until April this year, he said.
Russia may guarantee the discount from April through the
next 12 months, if Ukraine is ready to settle its debts,
according to Novak.
Ukraine should first pay $1.45 billion for the last two
months of 2013 and an additional $500 million as part of the
debt for gas received in April and May, Novak said. If there is
no payment by the morning of June 16, Ukraine will only get fuel
it pays for upfront, at the current price, he said.
The next step would be settling the rest of the debt for
April and May, which would total $2.35 billion at the new price,
according to Novak.
“Within a year we are ready to provide adequate safeguards
or to sign the necessary documents,” Novak said.
In response, Ukraine’s energy minister Yuri Prodan said his
country is ready to pay once Russia sets a “fair” market-based
price. The proposed government discount may be canceled at any
time, he said. Russia has done it once before, Ukrainian Prime
Minister Arseniy Yatsenyuk said in Kiev today before the talks.
“We know Russian tricks,” Yatsenyuk said.
The state energy company NAK Naftogaz Ukrainy will file for
international arbitration in Stockholm if Russia fails to agree
on the price. Ukraine could get the gas from the EU at a
significantly lower price through a so-called reverse route,
Prodan said. If Russia cuts the supplies, “Ukraine will employ
maximum possible reverse and wait for the decision of the
Stockholm arbitration,” he said.
Ukraine refused to pay after Russia raised the gas price by
81 percent in April. Supplier OAO Gazprom rescinded a price
discount granted in December because of Ukraine’s mounting
debts, while Russia stripped its neighbor of a 2010 export-duty
break that it exchanged for a lease on its Black Sea fleet’s
port in Crimea, which Russian President Vladimir Putin annexed
“If our offers are rejected, events will reach a
completely different stage,” Putin said today in Moscow minutes
before the talks in Brussels ended.
If Ukraine wants guarantees that Russia won’t cancel the
new discount, the government in Moscow should consider the
issue. But if the smaller country finds the discount too low and
wants more, “then this whole affair looks to be deliberately
heading for a dead end,” Putin said.
There’s no guarantee there will be an agreement in coming
days, because the arrival of summer takes the pressure off, said
Ekaterina Rodina, an oil and gas analyst at VTB Bank in Moscow.
Russia has shown it’s ready to negotiate by suggesting
discounts and debt-repayment extensions, while Europe and
Ukraine have managed to build significant gas stock in
underground storage, Rodina said.
“When all are comfortable and there is no pressing issue –
– the freezing weather — negotiations could be extended until