Warsaw Gas Talks Show No Progress

Written by | Tuesday, May 6th, 2014

The Warsaw talks are the first official attempt of Moscow, Kiev, and Brussels to settle the issue of gas prices. The three-party meeting that started on Friday (May 2) showed no results but readiness to meet again. Russia was represented by its energy minister, Alexander Novak, and Ukraine by energy and coal industry minister, Yury Prodan. The European Commission delegated EU energy Commissioner, Guenther Oettinger, who commented that the EU did not see the supply of gas for end consumers in EU and non-EU countries as guaranteed.
The energy ministers of Russia and Ukraine met for the first time since the annexation of the Crimean peninsula by Russian forces. As the Russian Energy Ministry put it, the meeting was there to “search for a way out of the crisis situation connected with Ukraine’s payments for Russian gas” meaning that both sides will focus on the “implementation of a contract to supply Russian gas to Ukraine, measures to ensure further transit to end-consumers in Europe, as well as the issue of payments by Kiev”. At the core of the current talks is how much debt Ukraine has to pay back and to that end it appears that Russia would also consider Ukraine’s ability to pay in the context of the current financial and economic situation in the country.
Nevertheless, the Russians said that the price was “clear in the contract signed until 2019” and any talks on this issue are “odd”. Russia’s Gazprom demands 485 USD per cubic meter of gas although the country used to pay only about a half of this price before the crisis. Likely being a result of the crisis, Kiev has not paid for any gas delivery in the last quarter of 2013 as well as the first quarter of 2014, Russians informed. Minister Novak added that there was a 16 May deadline for Russia to issue a bill that would have to be paid by Ukraine by May 31 in order to cover pre-consumption in June.
If these due payments are not paid, Gazprom will have the right to re-consider supplying Ukraine. In such a case, Mr Novak stressed that European supplies should not be affected as they are pre-paid by September 2014. Therefore, any likely disruptions and delays, which could potentially occur if Kiev does not pay its due payments, should be blamed on Ukraine only, Mr Novak concluded.

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