28 May 2014, 13:25

EU to help Ukraine find $10 bln to pay Russia for gas - newspaper

EU to help Ukraine find $10 bln to pay Russia for gas - newspaper

The Kiev authorities may have to pay Gazprom not $2.5 billion but some $10 billion, as, along with the payment for the gas debts accumulated by Kiev, it is also supposed to provide financial guarantees for pumping enough gas to underground storage facilities to ensure uninterrupted gas transportation across Ukrainian territory further to Europe during the 2014-2015 fall and winter season, and the EU may help Ukraine find this money, Izvestia reported on Wednesday.

The newspaper cites a source from a Russian delegation at negotiations on gas supply between Russia, Ukraine, and the European Commission as saying that European Commission representatives in Berlin assured Russia that the EU would provide assistance to Ukraine in financing the accumulation of up to 10 billion cubic meters of gas a year in Ukrainian underground gas storage facilities.

However, as European Union countries and their companies receiving gas are not really striving to act as guarantors of payments on Ukraine's debt, the matter is likely about providing assistance to Ukraine in getting the necessary financing, the source said.

He also made it understood that Gazprom would withdraw its demand that Kiev pay for gas supply in advance and would be prepared to discuss a compromise price for gas supplied to Ukraine starting April 1, 2014, when it was increased to $485 from $268.5 for 1,000 cubic meters of gas, only if Ukraine unconditionally pays part of its debts in an amount of at least $2 billion by the end of this week. An Energy Ministry spokesperson confirmed to Izvestia that a comprehensive program of financial assistance to Ukraine and gas transportation had been brought up at the negotiations but declined to provide any more details, including financial ones.

"Russia's proposals at the negotiations took into account such issues as gas supply, debt settlement, transit, and also Ukraine's general financial state and solvency. The gas price issue was not brought up. It will be discussed at the next round of the negotiations in Berlin on May 30 only if Ukraine pays $2 billion until Thursday inclusive. Notably, the parties are supposed to agree upon the final price by June 2. Otherwise, the prepayment option will be put into effect starting June 3, and Ukraine will not get a single cubic meter of gas if it doesn't pay in time," the ministry spokesperson said.

Gazprom spokesman Sergei Kupriyanov has told Izvestia that he did not hear Europe's promises to provide money for financing the pumping of gas into Ukrainian underground storage facilities and the settlement of its gas debts.

Sabine Berger, a spokesperson for European Commissioner for Energy Gunther Oettinger, told Izvestia that the parties had reached an agreement on Naftogaz's transfer of $2 billion to Gazprom's account at Gazprombank for gas Ukraine received from November 2013 to March 2014 and another tranche for gas supplied to Ukraine in April and May.

Once these payments are made, the negotiations will be continued. Berger made it clear that the European Commission will not pay Naftogaz or Gazprom directly, as there is money provided to Ukraine, including for this purpose, by the International Monetary Fund (IMF) and EU countries.

A spokesperson for Ukrainian Energy and Coal Industry Minister Yury Prodan declined comments on the matter. Russian presidential press secretary Dmitry Peskov told Izvestia that, if Ukraine does not pay for gas before the date agreed upon earlier, i.e. June 2, Europe would continue receiving Russian gas but Ukraine would receive just as much gas as it pays for. "At the present time, zero cubic meters has been paid for in advance," Peskov said, Interfax reports.

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