Russia PM orders Gazprom to demand pre-payment from Ukraine for gas

May 12, 2014 | Eastern Europe & Russia, LNG & LPG

Russian Prime Minister, Dmitry Medvedev

Russian Prime Minister, Dmitry Medvedev

Moscow, Russia | – Russian Prime Minister Dmitry Medvedev ordered the chief executive of the national natural gas monopoly Gazprom to demand a pre-payment from Ukraine for gas deliveries starting from June.

“It’s time to stop messing about. Tell them you are introducing prepayment for gas from tomorrow. I think Gazprom has taken all possible steps to resolve this matter by other means,” Mr. Medvedev said at a meeting with Alexei Miller and Russian Energy Minister Alexander Novak.

Mr. Medvedev’s threat to cut off Ukraine’s gas supply if it fails to pay by June 2, is the most recent of a series of bold demands from Moscow. Russian officials have repeatedly said Moscow will demand that Ukraine prepay for its June natural gas imports and that the first bill will be delivered to Kiev on May 16.

However, Mr. Medvedev hinted that Russia was ready for talks with Ukraine.

“They still have the opportunity to pay off [their debt] and to contribute the necessary funds or at least part of the funds,” he said, adding that Ukraine could initiate talks with Gazprom and demonstrate its desire to settle its debts. “We have so far not seen this desire from the Ukrainians, and this is unfortunate,” the prime minister said.

Earlier Monday, Russia’s deputy energy minister Anatoly Yanovsky said Russia is ready to consider lowering the price it charges Ukraine for natural gas, provided Kiev settles its outstanding debt,

“We are saying that in order to discuss any sort of compromise, the debts must be paid first,” he told reporters.

In Kiev, Ukraine’s finance minister Oleksandr Shlapak said the country was ready to pay Russia for its previous deliveries immediately, if Russia’s natural gas monopoly Gazprom were to keep the gas price for 2014 at the level agreed in late 2013. At that time, Russian President Vladimir Putin offered his Ukrainian counterpart, Viktor Yanukovich, a discounted energy price to lure him away from an agreement with the European Union.

Almost immediately after Mr. Yanukovich was ousted in late February, Russia raised the price for the gas it exports to Ukraine by more than 80%.

Ukraine has since run up a bill for Russian gas which Gazprom said has reached $3.5 billion, but Ukraine only partly recognizes this debt, stating the bill for April should be calculated based on the old price of $268.5 per 1,000 cubic meters, rather than on $485.50 per 1,000 cubic meters.

Russia said it will demand that Ukraine prepay for its June natural gas imports and the first bill will be delivered to Kiev on May 16.