Putin Pressures West on $2.2 Billion Ukrainian Energy Debt

In a letter to the leaders of 18 European countries, Putinmade clear that his patience would run out over Kiev’s $2.2 billion gas debt to Russia unless a solution could be brokered urgently.

Russia has nearly doubled the gas price it charges Ukraine, whose economy is in crisis, since pro-Moscow President Viktor Yanukovich was overthrown two months ago. Russia then annexed the Ukrainian region ofCrimea, provoking the biggest confrontation with the West since the Cold War.

Putin said Russian exporter Gazprom would demand advance payment for gas supplies to Ukraine and “in the event of further violation of the conditions of payment will completely or partially cease gas deliveries”.

That could have knock-on effects for European Union countries, much of whose Russian gas flows in pipelines across Ukraine.

“We fully realize that this increases the risk of (Ukraine) siphoning off natural gas passing through Ukraine’s territory and heading to European consumers,”the letter said.

Russia meets 30 percent of Europe’s natural gas demand and half of this goes through Ukraine.

The United States accused Moscow of using its vast energy reserves to pressure the former Soviet republic. “We condemn Russia’s efforts to use energy as a tool of coercion against Ukraine,” State Department spokeswoman Jen Psaki said.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza