Russia Tells Ukraine Gas Hike To Be Negotiated After Outstanding Debt Paid

Russia will consider a compromise on natural gas prices with Ukraine only after its neighbor pays its debt for previous supplies, the Energy Ministry said as preparations for talks begin in Brussels today.

Ukraine hasn’t used any of the funds received under a $27 billion international package to pay down its gas debt, Russian Deputy Energy Minister Anatoly Yanovsky told reporters today in Moscow. The country sandwiched between Russia and the European Union received the first $3.2 billion of aid last week. OAO Gazprom, Russia’s gas exporter, has billed Ukraine for $3.51 billion for fuel delivered in 2013 and through April.

Europe imports about 30 percent of its gas from Russia, half of which crosses Ukraine, tying the EU’s energy security to stability in the transit country. Ukraine, which depends on Russia for half of its gas consumption, has been seeking to renegotiate a 2009 gas contract since before a popular uprising began in Ukraine’s capital in November.

Russia doesn’t need “pain and suffering” in Ukraine, Yanovsky said, after being asked about sanctions. “We want to trade normally and receive a normal price for our goods.”

Gazprom raised the price it charges Ukraine for gas by 81 percent in April, to $485 per 1,000 cubic meters, more than any EU member pays.

via Bloomberg

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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