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Nation    

Russia to hold firm on natgas supply deal
Journal Staff Report

MOSCOW, Sept. 7 — Russian President Dmitry Medvedev told Russian gas monopoly Gazprom on Monday to prevent any changes to a gas supply contract that have apparently been requested by Ukraine.

Medvedev told the head of Gazprom that Russia would not accept any move by the Ukrainian authorities to demand advance payment for the transit of Russian gas to European consumers via its soil.

But the move also suggests the Kremlin is committed to enforcing the contract that may eventually trigger $5.1 billion in penalties against Ukraine for the failure to import the originally declared amount of gas.

"As far as an idea of an advance payment for tariffs, then I would like to ask you a simple question -- is it stipulated in a contract?" Medvedev asked Miller in televised comments.

After receiving a negative answer from Miller, Medvedev said: "Then don't pay! There's a need to act in accordance with the contract that has been signed.

"We've specially prepared it, it was born in the throes of pain, has been quite seriously developed and we are currently working in line with it."

The comments indicate that the Kremlin is committed to enforce the contract that may lead to Gazprom charging Ukraine $5.1 billion in penalties for the failure to import the originally declared amount of gas.

According to the contract, negotiated by Tymoshenko and her Russian Prime Minister Vladimir Putin, Ukraine was supposed to import 41.8 billion cubic meters of gas in 2009.

But demand for gas dropped dramatically this year due to on-going economic crisis, suggesting that Ukraine will probably import 33 billion cubic meters of gas in 2009.

Tymoshenko, after a meeting with Putin last week, said that Russia will not seek to impose the penalties.

But Ukrainian President Viktor Yushchenko said later that the promise not to impose the penalties was not reflected in the contacted, suggesting that the threat of sanctions is high.

The penalties would lead to a bankruptcy of Naftogaz, which is currently in talks with foreign investors to restructure the payment of $500 million Eurobond falling due on September 30.

In January-July 2009 Ukraine reduced imports of gas from Russia by 63.4% year-on-year to 11.4 billion cubic meters, down from 31.2 billion cu m imported in the same period of the past year.

Ukraine reduced consumption of gas by 28.9% year-on-year to 29 billion cu m in the first seven months of 2009, down from 40.8 billion cu m. (tl/ez)




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