Russia Says Ukraine Gas Deal Conditional on EU Guarantees
Russia will resume later today
negotiations with Ukraine on restoring natural-gas flows as the
European Union seeks to broker an interim deal between the two
countries to prevent supply disruptions this winter.
Russia’s Energy Ministry said its chief, Alexander Novak,
his Ukrainian counterpart, Yuri Prodan, and EU Energy
Commissioner Guenther Oettinger plan to restart talks at 7 p.m.
in Brussels.
Overnight negotiations failed to bring an accord to ensure
deliveries of Russian gas to Ukraine, the transit country for 15
percent of EU needs for the fuel. Financing of future payments
for Ukrainian imports was the main sticking point, according to
Russia, whose delegation left for Moscow earlier today.
“Information from European Commission allows to assume
that we can go back to Brussels,” Sergei Kupriyanov, spokesman
for Russian gas exporter OAO Gazprom (GAZP), said by telephone.
The 28-nation EU is seeking to avoid a repeat of 2006 and
2009, when disputes between the former Soviet allies over gas
debts and prices led to fuel transit disruptions and shortages
across Europe amid freezing temperatures.
“Our common ambition is to come to an interim solution, a
winter package to solve our security of supply challenges for
next winter, from now until the end of March,” Oettinger told
reporters before the talks started yesterday.
Common Understanding
The negotiations lasted until 4 a.m. in Brussels and
“jointly prepared documents laying down a common
understanding” have been sent to Kyiv and Moscow for approval,
the EU said. The package that needs to be signed includes an
agreement between Gazprom and Naftogaz as temporary amendment to
the main gas supply contract, a Russia-Ukraine-EU protocol on
basic terms of resuming fuel supplies and a Ukraine-EU protocol
on payment guarantees, Novak said.
Andriy Kobolyev, chief executive officer of Naftogaz, said
“the probablity is high” that an interim accord will be
reached. “All details will be released after signing,” he said
on his Facebook page.
Gazprom stopped supplying its Ukrainian partner, NAK
Naftogaz Ukrainy, in June because of unpaid bills as fighting
raged between pro-Russian rebels and government forces in the
country’s easternmost regions.
Under a preliminary accord brokered by the EU in September,
Ukraine would pay $3.1 billion by the end of the year for
earlier supplies. In return, Russia would cut prices $100 per
thousand cubic meters to $385 through March.
‘Coming Days’
The first debt installment of $1.45 billion from Naftogaz
is expected in “coming days,” Novak told Russian Prime
Minister Dmitry Medvedev today. The country also needs around
$1.6 billion to pay for future deliveries by the end of this
year, he said.
Ukrainian Prime Minister Arseniy Yatsenyuk plans to raise
the topic of gas supplies during phone conversations today with
U.S. Vice President Joe Biden and German Chancellor Angela Merkel.
“One of main issues to be discussed is gas deal and
additional financial instruments for Ukraine, which will allow
to stabilize budget situation and pay for our energy bills,”
Yatsenyuk told reporters.
The talks on approving the draft agreement and restoring
gas flows come as Ukrainian President Petro Poroshenko moves to
form a government among the pro-European parties that gained a
constitutional two-thirds majority in the parliamentary election
on Oct. 26.
‘Payment Problem’
Oettinger estimated yesterday in an interview with ZDF that
there was a 50 percent chance of a gas deal. “Ukraine has a
large payment problem; it is practically insolvent,” Oettinger
said. Still, the country “gets billions in aid” and “now has
to earmark some of the funds for gas purchases.”
Negotiators will discuss options for bridge financing to
cover payments until an International Monetary Fund package for
Ukraine is ready, by February at the latest, Germany’s Merkel
said on Oct. 24. If flows to Europe suffer, Ukraine wouldn’t get
supplies from EU nations because the bloc “would naturally need
all the gas itself,” she said.
The EU is close to approving about $1 billion in extra
funds for Ukraine, with part of that earmarked for gas supplies,
the Wall Street Journal said earlier this week, citing two
unidentified officials. Even so, Ukrainian Finance Minister
Oleksandr Shlapak said on Oct. 28 he doubts a deal will be
struck anytime soon.
To contact the reporters on this story:
Elena Mazneva in Moscow at
emazneva@bloomberg.net;
Ewa Krukowska in Brussels at
ekrukowska@bloomberg.net;
Volodymyr Verbyany in Kyiv at
vverbyany1@bloomberg.net
To contact the editors responsible for this story:
Lars Paulsson at
lpaulsson@bloomberg.net;
Will Kennedy at
wkennedy3@bloomberg.net
Jones Hayden