Russia Cuts Gas Supply To Ukraine

Gazprom Logo

Gazprom logo

The Ukraine must now pay Russia’s state-owned gas company Gazprom upfront for its gas supplies, after missing a payment deadline early Monday morning.

The deadline set by Gazprom called for US$1.95 billion – out of US$4.5 billion it says it is owed – by 06:00 GMT. Earlier threats said gas supplies would be cut off if the amount was not paid in time, but there is no sign that has happened.

Gazprom has stressed that other European customers would not be affected by the situation with Ukraine. Nearly 15-percent of Europe’s gas comes through the Ukraine.

Both Gazprom and Naftogaz, the Ukrainian gas company, filed dueling lawsuits moments after the deadline passed. Gazprom is seeking the full US$4.5 billion, while Naftogaz is seeking US$6 billion in “overpayments” it has made since 2010.

Ukraine’s discounted gas rate of US$268 per 1,000 cubic metres was cut last April after Moscow accused Kiev of not paying its bills. The new price, US$485.50 per 1,000 cubic metres, is the highest in Europe.

Kiev said it would not pay the 80-percent price increase, but did pay US$786 million at the beginning of June.

Gazprom accepted the amount as a partial payment and extended its deadline to June 16.

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