Only on prepayment terms: Russia’s Gazprom halts gas supplies to Ukraine

Ukraine will now have to pay up front for any future Russian gas supplies, after Kyiv ‘failed to pay its huge debts’, Russia’s giant Gazprom announces.

It earlier warned it could cut supply if Ukraine failed to pay $1.95bn by 06:00 GMT. ‘We reached no agreement. The chances that we meet again are slim,’ the BBC qoutes Gazprom spokesman Sergei Kuprianov as saying.

However, EU Energy Commissioner Guenther Oettinger, who attended the talks, said he was ‘not pessimistic’ about a deal. He said he would continue to work for an agreement despite his compromise proposal, that Kyiv pay $1bn on Monday and the rest in instalments, being rejected by Gazprom.

Ukraine said it refused to clear its debts completely in protest at Gazprom’s recent 80% price increase.

Gazprom ended its discount price for Ukraine, which was negotiated by former President Viktor Yanukovych last December, in April. Before the discount was cancelled, Ukraine’s gas bill was heavily reduced by Russia to $268 per 1,000 cubic metres. The price is now $485.50 per 1,000 cubic metres, the highest in Europe.

Heading into the negotiations, Kyiv said it was ready to make the $1.95bn payment if Russia cut its price to $326 per 1,000 cubic metres. But Russian President Vladimir Putin said $385 per 1,000 cubic metres was his final offer.

Prospects of a breakthrough in discussions were diminished in recent days after increasing tension between Kyiv and Moscow over the pro-Russian insurgency in the east of Ukraine. Moscow reacted angrily to a violent protest outside its embassy in Kyiv on Saturday after separatists shot down a Ukrainian military plane, killing all 49 people on board. Meanwhile, Ukraine accused Russia of sending tanks into the east of the country to support pro-Russian fighters.

Meanwhile, Ukrainian state gas company Naftogaz said it had filed a lawsuit at the Stockholm arbitration court to try to recover $6 billion in what it said were overpayments to Russian exporter Gazprom.

Naftogaz said in a statement it was also demanding a ‘fair and market price’ for natural gas supplies from Gazprom., via,

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