Compromise for Ukrainian $2.237 Billion Gas Debt

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In a Trilateral consultation between Russia, the EU and Ukraine on May 26, a compromise was made to allow Naftogaz to divide a $2.237 billion debt payment into two, Russia’s Energy Minister and Gazprom told the Russian President during a meeting on Wednesday.

Naftogaz, Ukraine’s oil and gas company, will be allowed to pay the first $2 billion to Russian state owned gas company Gazprom by May 30, and then the second payment of $500 million by June 7.

The payment is for a debt that accumulated from November 2013 to April 2014.

The $500 million will also be a partial advance payment since the deadline for the May payment falls on June 7, Russian Energy Minister Alexander Novak said.

Gazprom and Mr. Novak have agreed to hold continued talks with Naftogaz after the first payment is received.  Mr. Novak said that they plan to meet on May 30 to discuss further steps, including possible options for future gas payments, with the possibility of a discount, “but not a revision of the terms and conditions of the 2009 contract [Kharkiv Pact].”

The Kharkiv Pact was a 2010 agreement between Moscow and Kiev that allowed Russia to continue to use Naval facilities in Crimea for an additional 25 years in exchange for a discount on natural gas for Ukraine.

The treaty was later used by Moscow to legitimize its invasion of Crimea in March of this year.

Chairman of Gazprom Management Committee Alexei Miller told Russian President Vladimir Putin that Naftogaz had been given the preliminary bill for gas supplies for June, and that if Ukraine did not pay the money, then on June 3, at 10 a.m., gas supplies to Ukraine will be restricted.

“Ukraine has been taking maximum daily volumes allowed by the contract throughout May,” Mr. Miller said.  He added that by June 7, Ukraine’s gas debt will have accumulated to over $5.2 billion.

In conclusion to the meeting, President Putin said: “I think it is clear to any objective observer that Russia’s position with regard to our energy contracts and energy cooperation with Ukraine is not just that of a partner but more than friendly.”  He added that he hopes the gas situation does not end up with Russia being forced “to move over to advance payments.”

On Tuesday, Ukrainian Prime Minister Arseniy Yatsenyuk challenged Gazprom’s claims, saying that Russia actually owed Ukraine $1 billion in compensation for natural gas seized in the annexation of Crimea.

The next round of consultations between Russia, the EU and Ukraine are scheduled to take place on May 30. 

A Civil War

“It’s war, it’s civil war.”  That’s what an agonized, middle-aged man and resident of Donetsk described the situation in his home city as to BBC.

And his claims appear to be at least partially true.

Recent fighting at Donetsk International Airport has left over 100 pro-Russian gunmen dead, separatists say.

On Wednesday, the Ukrainian Military said that they had gained control of the airport, but sporadic gunfire was reported by journalists.

Scores more have been killed in fighting between Ukrainian soldiers and anti-Kiev gunmen in recent months.

Newly elected Ukrainian President Petro Poroshenko has promised to intensify the military operations being conducted against separatists in eastern and southern Ukraine, a promise which may very well lead to even bloodier violence in an already tormented country.

Russian Foreign Minister Sergei Lavrov on Wednesday called on the Kiev authorities to end its military operations.

“The number one task for the Kiev authorities, and the test of their strength given the result of the [presidential] election, is to bring an immediate end to the use of the army against the public, and an end to any violence on all sides,” he said.

In Donetsk, barricades and road blocks have been set up throughout the city as gunmen and residents prepare for a highly possible invasion by Ukrainian military forces.

“History is repeating itself,” another resident of Donetsk compared the current crisis to the invasion of Ukraine by Nazi German during WWII.

Meanwhile, more members of the OSCE Special Monitoring Mission (SSM) were detained on Wednesday.

Four other SSM members went missing on Monday and have not been heard from since.

In April, a group of International observers were detained by pro-Russian activists in Slovyansk, the separatists strong hold, for a week before being released.

As the violence continues to tear apart Ukraine, citizens have cried out in anger, frustration and fear.  While some believe the Kiev government is doing all they can to bring an end to this alleged “civil war”, some have lashed out against them.

One woman expressed her fear and frustration of the Ukrainian government and military’s recent actions to RT News Agency, saying: “We are simply horrified – you see? Horrified that our ‘brave army,’ which we pay taxes to maintain, is [doing] nothing else but destroying us. And our president, who must protect the civilian population – he is determined to exterminate us.”

 

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