KIEV, Oct. 31 - A Ukrainian gas trader on Wednesday paid in full the remaining $729 million debt owed for Russian gas supplies, meeting the deadline and averting a supply cutoff.
Ukraine was supposed to pay the money before Nov. 1 according to an agreement reached in Moscow earlier this month following a threat from Gazprom that gas supplies may be suspended.
UkrGaz-Energo, the Ukrainian trader and the only buyer of Russian gas imports, made the payments, the company reported Wednesday.
“The payment was made in cash and in full,” UkrGaz-Energo said in a statement. “The imports of gas for Ukrainian consumers are handled without any restrictions.”
The development is a relief for the European Union, which has been worried the dispute over gas debt between Ukraine and Russia could lead to disruptions of Russian gas supplies to Europe.
Meanwhile, UkrGaz-Energy came to the rescue of cash-strapped Naftogaz Ukrayiny, the national oil and gas company, which has apparently failed to borrow $229 million for the debt payment as it had originally planned.
Analysts have been questioning Naftogaz’s ability to borrow the money quickly following the move by Fitch Ratings earlier this month to put the company’s credit rating on watch for possible downgrade.
Fitch explained the move by Naftogaz’s failure to disclose its financial results to investors holding $500 million worth of the company’s Eurobonds earlier this year.
Naftogaz, which buys some of Russian gas from UkrGaz-Energo and sells it to the residential sector, owed $729 million for earlier gas supplies. It was able to pay only $500 million of this debt using a $500 million payment that Gazprom had wired to the company on Tuesday to pay for transit services.
Ukraine is the main transit route for Russian gas supplies to Europe and any suspended gas supplies to the country could automatically affect the European deliveries, analysts said.
Gazprom moves 110 billion cubic meters of gas annually via Ukrainian gas pipelines to Europe, which is about 80% of Russia’s Europe-bound gas supplies.
UkrGaz-Energo is 50-50 owned by Naftogaz Ukrayiny, the national oil and gas company, and by RosUkrEnergo, a Swiss-based gas trader controlled by Gazprom, the Russian gas giant.
UkrGaz-Energo owed $929 million as of early October, but the trader had already made the payment of $200 million on October 18.
UkrGaz-Energo said the payments were channeled to RosUkrEnergo, which is expected to wire the money directly to Gazprom.
Russian Prime Minister Viktor Zubkov said in early October that Ukraine owed more than $2 billion to Gazprom for gas supplies, of which $1.3 billion was owed by RosUkrEnergo and the remaining $929 million jointly by Naftogaz and UkrGaz-Energo.
RosUkrEnergo paid its debt earlier in October by transferring 8 billion cubic meters of gas that it had stored in Ukrainian underground gas tanks, to Gazprom. (sb/ez)