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‘Ukraine must pay gas debts’ – EU Energy Commissioner

RT | May 26, 2014

EU Energy Commissioner Guenther Oettinger said Ukraine needs to begin repaying its $3.5 billion gas debt to Russia and proposed a fair ‘market price’ of between $200-$400 per 1,000 cubic meters to resolve the dispute.

“The bills are on the table, and they must be paid,” Oettinger said on German radio station SWR on Monday after holding talks in Berlin with Russian Energy Minister Alexander Novak and Gazprom Deputy CEO Aleksandr Medvedev.

Oettinger suggests Ukraine use some of the $3.2 billion from its first IMF aid tranche and other EU assistance programs to start paying off its debt to Gazprom.

Ukraine owes Russian state-owned Gazprom more than $3.5 billion, as it has not paid its gas bills in full since July 2013. Russia has even given Ukraine 10 billion cubic meters of gas free of charge, as much as Russia delivers to Poland in a year.

President Vladimir Putin said that Russia is only ready to discuss a new gas discount for Ukraine once it starts paying off its debt.

Oettinger said that a “fair and suitable market price” to resolve the dispute would be between $200-$400, which the commissioner considers “common for the European market.”

Kiev has said it is ready to pay Russia as long as Gazprom lowers its current rate of $485 per 1,0000 cubic meters. The price climbed when Gazprom canceled two gas discounts from the $268.50 per 1,000 cubic meters rate it paid in the first three months of 2014.

After June 1, Ukraine will have to prepay for any gas deliveries, as Gazprom said it won’t let any more debt accumulate.

“There are some barriers to indulgence, some things we cannot afford,” Russian President Vladimir Putin said speaking at the 18th annual St. Petersburg Economic Forum on Saturday.

Europe sources about one third of its total energy supply from Russia, 50 percent of which flows through Ukraine. Any possible disruption therefore not only affects the pipeline host country, but all of Europe.

“We all know who is to blame – the transit country, Ukraine has abused its position. Ukraine insists on benefits it is not entitled to,” Putin said at the forum on Saturday.

Oettinger has been a major player in brokering a deal between the two embittered nations, but so far no concrete negotiation has been reached.

May 26, 2014 - Posted by | Economics | , , ,

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