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Russia sets gas prepayment mode for Ukraine
June 16, 2014, 7:36 am

The Russian energy giant will now be filing a lawsuit against Naftogaz with the Stockholm Chamber of Commerce Arbitration over the pending payment [Getty Images]

The Russian energy giant will now be filing a lawsuit against Naftogaz with the Stockholm Chamber of Commerce Arbitration over the pending payment [Getty Images]

Russian energy giant Gazprom decided on Monday to introduce prepayment regime with Ukraine’s Naftogaz company, as the latter failed to pay its multi-billion-US dollar gas debt.

“Today Gazprom switched Naftogaz of Ukraine to a gas prepayment scheme starting from 10:00 am in full compliance with the existing contract,” Gazprom said in a statement.

“The decision was made because of the chronic nonpayment by Ukraine’s Naftogaz. Arrears by the company for Russian gas deliveries stand at 4.458 billion dollars,” the statement added.

The Russian energy giant will now be filing a lawsuit against Naftogaz with the Stockholm Chamber of Commerce Arbitration over the pending payment.

The European Union is dependent on Russian gas piped through Ukraine for about 15 per cent of its supplies and will be hard hit by the current stasis in talks.

Russian President Vladimir Putin had last week offered the new government in Ukraine a gas discount “absolutely identical” with those to ousted President Viktor Yanukovych’s government, which was $100 lower than the contract price.

In 2010, Russia and Ukraine signed a gas-for-fleet agreement, under which Moscow offered a discounted gas price in exchange for extending its lease of its Black Sea fleet facility in Crimea for another 25 years.

In April, Moscow declared the pact no longer valid as Crimea joined Russia in March. Following the announcement, Gazprom canceled discounts on gas supplies to Ukraine and set a price of 485 dollars per 1,000 cubic meters, which Kiev called overpriced and temporarily suspended gas imports.

 

TBP and Agencies

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