20:38 26.09.2014

Ukraine due to pay Gazprom $2 bln by end Oct – Oettinger

3 min read

Ukraine is due to pay Russia's Gazprom $2 billion by the end of October, Guenther Oettinger, European Commission vice president, told a press conference following the trilateral talks between Russia, Ukraine and the EU in Berlin.

The said the decision was reached at negotiations.

It still has to be endorsed by the relevant governments.

Ukraine is due to pay another $1.1 billion by the end of the year, Oettinger said.

The size of the debt for gas supplied in the past depends on the prices of the supplies, which the sides says varies from $268 to $485 per thousand cubic meters.

The amount could change as the result of arbitration hearings.

The World Bank and the International Monetary Fund could guarantee the repayment of Ukraine's $3.1 billion debt to Russia, Russian Energy Minister Alexander Novak said after three-party gas talks.

"These funds, which were received by Ukraine amounting to $3.1 billion from the IMF, could be a source for the repayment of its debt and the World Bank and IMF could act as guarantors of repayment," he said.

Novak said there was a proposal to organize supplies of 5 bcm of Russian gas at $385 per thousand cu m and that a provisional price for Ukraine over a period of six months might be arrived at by granting a discount of $100 out of the duty "+/- a few dollars - these are market fluctuations as per the price formula." Novak said the "price earlier suggested for the long term is now being suggested for six months."

The EC's Oettinger said Ukraine need to buy at least 5 bcm or up to 12 bcm, of additional gas to get through the winter normally and ensure undisrupted transit. He said Novak had agreed with this.

Both said the volume of supplies might be increased over the next six months.

The Commissioner also noted that since NJSC Naftogaz Ukrainy and Gazprom had previously appealed to the Stockholm arbitration to resolve a dispute about the price of gas supplied, then if the Stockholm Arbitration agrees with Ukrainian arguments that the price for gas supplied in November-December 2013 and from April to June 2014 should be $285 per 1,000 cubic meters, it would mean that Ukraine has fully repaid its debts for Russian gas.

In the event that the court takes Russia's side, Ukraine will have to pay another $2 billion.

Oettinger also noted that in the coming days the parties must consult with their governments so that the achieved agreements be formalized in a binding protocol next week if there is no objection.

"By the end of next week we can have a binding protocol," Oettinger said.

As reported, the EU, Ukraine and Russia have been holding tripartite talks on gas supplies to Ukraine since the beginning of May 2014.

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