Ukraine gas cutoff back on agenda

Gazprom spokesperson Sergei Kupriyanov is confident that gas debt issues are far from resolved. He claims that the $800m payment is only part of the news Gazprom received from its Ukrainian partners, while the remaining part states quite clearly that no further payments will be made this year. This means that Ukraine has paid through October, but the debt for November and December (which amounts to roughly $2bn including fines and penalties) will not be settled by the end of the year. Kupriyanov stressed that after today’s payout, the “January 1 problem” had only escalated, as Gazprom would not be able to switch to any new gas supply contract when it is owed $2bn.

In turn, Gazprom's Deputy CEO Alexander Medvedev announced that he had made various debt repayment proposals to the company's Ukrainian counterpart, but, "not one of them was heard by the Ukrainian side." Kupriyanov added that in view of this, the Ukrainian side - in stark contrast to Gazprom - was not proposing any crisis recovery plan, and that this would weigh on talks over signing a new direct contract for 2009. He stressed that a new contract would not be signed unless Ukraine paid off the debt by the end of the year, noting that in this case Gazprom would have no legal framework for supplying gas to Ukraine as of January 1, 2009.

Meanwhile, Kupriyanov asserted that Gazprom would inform its European partners of Ukraine's defaults on gas payments. According to the spokesperson, Gazprom representatives have already warned European consumers about the situation’s most recent developments, and will inform them again regarding today's announcements by Ukraine that it will make no more payments on its debt this year. Gazprom will do this by sending all of its partners letters signed by the company's CEO with a comprehensive assessment of the current situation and potential risks, Kupriyanov noted. He added that if any gas transit problems arose, the responsibility would lie entirely with Ukraine.

Earlier today, Ukrainian President Viktor Yushchenko announced that Naftogaz of Ukraine had paid $800m for the gas consumed from deliveries made to the gas storage facilities in the summer and fall of 2008, and would pay a further $200m soon. Yushchenko claimed that he considered the gas matter settled for the time being.

On December 16, a Ukrainian cabinet source said that Naftogaz of Ukraine would be able to repay up to $1bn of its debt to Gazprom for consumed gas. According to the Russian gas producer’s data, Ukraine’s debt for consumed gas is $2.4bn, while the Swiss-based gas trader RosUkrEnergo puts the figure at $2.195bn. Russia and Ukraine are currently in talks on signing supply and transit contracts for 2009 and subsequent years in the wake of price rises on Central Asian gas bought by Gazprom and pipelined to Ukraine. The parties are looking to sign a long-term 10-year agreement.