Gazprom Extends Deadline for Ukraine Gas Payment

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Gazprom Extends Deadline for Ukraine Gas Payment

Russia has given Ukraine some extra time to clear its outstanding gas debt. Ukraine sent $786 million in partial payment of its gas bill, after which Russia’s energy firm Gazprom gave the country more time to pay the remaining balance.

The firm had in the past said it would stop supplies of gas to Ukraine until the country paid its debt in full and agreed to a pre-paid arrangement. Ukraine owes Gazprom about $2.5 billion, the energy giant says.

The two sides will get back to the negotiating table now that a partial settlement has been received, BBC reported.

On Friday, Ukraine announced it had made a payment, although it has declined to clear the gas bill in full, lamenting Gazprom’s recent decision to hike prices by 80%.

Russia said the amount paid was only for supplies delivered in February and March.

Chief executive of Gazprom Alexei Miller welcomed Ukraine’s decision to “start to pay back its debt” and said the company was pushing back the pre-payment requirement until 9 June.

Analysts were of the option that Ukraine bought more time with the payment and now it can continue to press for a lower price for the gas it receives from Gazprom.

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“Even though the $786m seems to be less than expected, this could provide some short-term relief with regard to Russian-Ukrainian price negotiations,” VTB Capital said.

Presently, the per-1000 cubic meters-price of gas supplies from Gazprom to Ukraine is $484.50. Previously, the company charged $268 for the same volume of gas shipments to Ukraine. At the revised rates, Ukraine is being charged more than any other European consumer of Russian gas.

Europe depends on Russia for fulfillment of about 15% of its gas needs.

According to Bloomberg, analysts believe Russia postponed the date of commencement of the pre-paid regime for gas supplies to Ukraine because its president Vladimir Putin hoped to avoid a possible halt in supplies having to be discussed during his scheduled visit to France.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com