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Gazprom hits Ukraine with new demands
Journal Staff Report

KIEV, Feb. 21 - Russian gas giant Gazprom on Thursday made new demands against Ukraine, insisting the country must return 4 billion cubic meters of natural gas, Prime Minister Yulia Tymoshenko said.

Tymoshenko, who spent five hours in talks with Alexei Miller, the CEO of Gazprom, earlier Thursday, said the new demands had surprised her government.

It appears that the problems are significantly worse than has been assumed by the government, Tymoshenko said at Boryspil airport after arriving from Moscow. Ukraine, besides cash, also owes billions of cubic meters of gas that must be returned in-kind.

Tymoshenko said Ukraine will clear $1 billion debt that had been owed by Naftogaz Ukrayiny, the national oil and gas company, for gas supplies delivered in November and December 2007.

Naftogaz already paid a total of $284 million against the debt over the past seven days, making two installments, including $178 million on Wednesday and $106 million on February 14.

Gazprom has been earlier estimating the overall debt at $1.5 billion, which included $1 billion for gas supplied in 2007 and $500 million for gas supplied so far this year.

Gazprom had been threatening to cut gas supplies to Ukraine on Feb. 12 unless steps are taken to clear the debt. A major aggravation was averted only after a deal between Ukrainian President Viktor Yushchenko and his Russian counterpart Vladimir Putin.

The deal anticipated that Naftogaz and Gazprom will create two 50/50 joint ventures that will supply imported natural gas to Ukraine.

The joint ventures are supposed to replace RosUkrEnergo, a Swiss-based controversial gas trader controlled by Gazprom, and its Ukrainian subsidiary UkrGaz-Energo.

Tymoshenko originally praised the deal as a victory, days later her allies in the government said she would seek to hold gas talks in Moscow from scratch, disregarding the deal reached between the two presidents.

But the comments issued by Tymoshenko during and after her two-day visit to Moscow, show that her efforts to re-negotiate the deal had failed.

Even worse, Gazproms new demands against Ukraine to return 4 billion cubic meters of gas may pose a major challenge to the country and may deplete its natural gas reserves.

Tymoshenko had a two-hour meeting with her Russian counterpart Viktor Zubkov on Wednesday. She also had a three-hour meeting with Putin in his residence outside of Moscow late Wednesday.

Tymoshenko, following the meetings, said UkrGaz-Energo will probably be removed from the Ukrainian market before the end of the first quarter.

We agreed to eliminate one of the intermediaries, UkrGaz-Energo, in the first quarter, Tymoshenko said.

Meanwhile, this contrasts with an earlier position of Tymoshenko, whose government had already taken steps to eliminate the trader earlier this year.

The government cancelled UkrGaz-Energos gas supply license reducing the amount of gas that the company is allowed to sell in Ukraine to 5 billion cubic meters from 55 billion cubic meters. (sb/ez)




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