Putin offers to keep Ukraine gas discount afloat
June 11, 2014, 5:16 pm

Putin at a meeting with Government Cabinet members on June 11, 2014 [PPIO]

“I ask the Government and the Prime Minister to look at what could be done at the government level or through our agreements with the Ukrainian government to cement these conditions and make them absolutely reliable and unchanging for an agreed period,” Putin told a government meeting held on Wednesday.

He said the conditions proposed by Russia’s energy giant Gazprom to Kiev were “absolutely identical” with those to ousted President Viktor Yanukovych’s government, which was $100 lower than the contract price.

He pointed out that neighbouring countries, Poland and a few others, “receive gas at a higher price but using the same method for obtaining this price, namely, reducing the export duty on gas”.

Putin, however, warned that it is not even these mechanisms that are the issue.

“The issue is that our Ukrainian partners find these discounts insufficient and want more, though it is not very clear on what grounds. But if this is the case, then this whole affair looks to be deliberately heading for a dead end,’ said Putin.

Russian Prime Minister Dmitry Medvedev, for his part, said the government will draft proposals “that will mean the long-term character of discounts.”

He said Russia was ready to offer the discounts despite the fact that they “have a certain toll on us, and a quite painful one.”

Meanwhile, if Kiev does not pay its gas debt, Medvedev said, “what it has paid could at any moment turn into an advance form of payment, and then Russia and Ukraine will go to a different stage of relations on the gas issue.”

The government meeting came on the same day representatives from Russia, Ukraine and the European Union gathered in Brussels for gas talks.

Ukrainian Energy Minister Yuri Prodan said his government was not satisfied with Russia’s proposal, saying “I want to refer this issue to the Stockholm court of arbitration,” Russian news agency RIA Novosti reported.

European Energy Commissioner Gunther Oettinger said the proposed 385-dollar per 1,000 cubic meters “can be considered acceptable,” but said the proposal should also envisage further price reduction in certain conditions.

In 2010, Russia and Ukraine signed a gas-for-fleet agreement, under which Moscow offered a discounted gas price in exchange for extending its lease of its Black Sea fleet facility in Crimea for another 25 years.

In April, Moscow declared the pact no longer valid as Crimea joined Russia in March. Following the announcement, Gazprom canceled discounts on gas supplies to Ukraine and set a price of 485 dollars per 1,000 cubic meters, which Kiev called overpriced and temporarily suspended gas imports.

Source: Agencies