FX.co ★ Kiev admits $2.2 bln debt to Gazprom

To recognize a problem is the first step to its solution. This fundamental truth suggests that the suspended payment for Russian gas is set in motion. Ukraine’s government has acknowledged its debt to Russia for natural gas deliveries. Moreover, the parties have eventually settled the debt of $2.2 billion as of April 1. According to Alexandr Novak, Russia’s Energy Minister, Kiev has also agreed on volumes of gas supplies. Meanwhile, the three-party gas talks facilitated by the European Commission reached a stage when a discount for Ukraine might be put on the agenda. Importantly, the Russian Energy Minister highlighted that the base price of $485 per 1,000 cubic meters would remain valid, though the Russian side is ready to discuss soft payment terms. It means that the gas contract made in 2009 will not be revised. The painstaking talks led the parties to a compromise over the debt payment. Alexandr Novak commented that Ukraine’s Naftogaz should pay Gazprom $2 billion until May 30. $500 million is expected to be paid off until June 7. This settlement will cover partially Ukraine’s debt. However, the debt is steadily growing in the course the long-lasting talks. According to Gazprom’s flash estimates, Kiev’s debt against the Russian gas giant will swell to $5.2 billion by early June. Previously, European Energy Commissioner Gunther Oettinger reckoned Ukraine’s gas debt equals $4 billion. Interestingly, Ukraine’s Energy Minister Yuriy Prodan used to insist that he did not consider the debt at $2.2 billion to be irrefutable. Besides, he used to claim that Kiev did not acknowledge the debt from April to May in full because of unreasonably upgraded prices.