KIEV, March 1 – Ukraine and Russian gas giant Gazprom failed to agree on their $600 million natural gas debt dispute on Saturday, leaving a quarter of the country’s gas imports in limbo.
The failure comes two days before the Monday deadline that Gazprom has set for Ukraine to pay its outstanding natural gas debt or face a 25% cut in its gas supplies.
The Russian company last month demanded the payment of about $1.5 billion it said was owed by the Ukrainians for November and December 2007 and so far this year.
The remaining $600 million, it said, is owed for gas delivered in January and February.
The dispute comes despite an agreement last month by Ukrainian President Viktor Yushchenko and his Russian counterpart, Vladimir Putin. Since that deal was reached, Yushchenko has voiced criticism of the government of Prime Minister Yulia Tymoshenko for delay in paying the debt.
This criticism has not apparently gone unnoticed by Russia’s ambassador.
“It’s something you have to ask your government whether they’ve paid the debt, whether they’re going to leave their citizens without heat energy,” Viktor Chernomyrdin, the Russian ambassador to Ukraine, said Sunday.
Meanwhile, Tymoshenko, speaking at a press conference on Saturday, assured Ukrainians that no gas supply disruptions should be expected on Monday.
“I’m convinced there will no gas supply cutoff,” Tymoshenko said. “Let me say again that Ukrainians should be calmly using their gas. Their gas will not be cut off.”
Tymoshenko argued that Gazprom had not sent any official notification about the gas supply restriction, which suggests the supplies on Monday will be business-as-usual.
“No official papers have been submitted,” Tymoshenko said. “I’m sure Ukraine will keep receiving the same amount of gas that the country needs.”
The dispute between Ukraine and Russia is watched carefully throughout Europe because Ukraine is the major transit nation for Russian gas supplies to the European Union.
Gazprom assured the EU last week any restrictions on gas supplies to Ukraine should not affect its gas deliveries to Europe, but Naftogaz Ukrayiny, the Ukrainian company that handles the transit, warned the move would cause disruptions.
Gazprom sends 110 billion cubic meters of gas via Ukrainian gas pipelines, which accounts for up to 80% of Russia’s Europe-bound gas. Russia accounts for a quarter of gas supplies to Europe.
Ukraine heavily depends on gas imports as domestic extraction covers just more than a quarter of its annual gas needs. Ukraine imports about 55 billion cubic meters of gas, while domestic extraction stands at 20 billion cubic meters a year, according to the energy and fuel ministry.
The Tymoshenko government last week ordered to start strict daily monitoring of gas imports coming from Russia, a move suggesting that Kiev may have been preparing for the worst-case scenario.
Finance Minister Viktor Pynzeny said the government has been sending special customs agents to every gas pumping station at each pipeline that currently moves gas from Russia to Ukraine. (tl/ez)