Ukraine, Gazprom reach deal on gas debt

Ukraine is expected to pay $1.3 billion it owes OAO Gazprom for natural gas by Nov. 1 under an agreement reached Oct. 3 to avoid cuts in gas supplies.

Uchenna Izundu
International Editor

LONDON, Oct. 5 -- Ukraine is expected to pay $1.3 billion it owes OAO Gazprom for natural gas by Nov. 1 under an agreement reached Oct. 3 to avoid cuts in gas supplies.

Gazprom has assured Europe that it will not suffer a shortfall in gas deliveries after a meeting between Alexey Miller, chairman of the Gazprom management committee, with Ukraine Energy Minister Yury Boiko. Gazprom had threatened to cut supplies to Ukraine if the arrears were not paid by the end of the month.

According to Russian news reports after the talks, Boiko said, "I hope the situation will stabilize in the near future."

Europe's Commissioner for Energy Andris Piebalgs welcomed the resolution, stressing that Europe expects the problem to be solved by Nov. 1.

"Transparency is capital in our relations with gas supply and transit countries," he said.

Earlier this week, the European Commission urged Ukraine and Gazprom to speedily resolve the fallout over gas debt payments. It noted that Gazprom had promised to fulfill all existing gas supply commitments to European companies. The commission has invited Russia and Ukraine to discuss energy security in Brussels later this month.

Ukraine has disputed the debt. First Deputy Prime Minister, Finance Minister Nikolai Azarov said Ukraine does not "owe a single cent. The size of debt which it (Gazprom) is talking about is out of the question."

The dispute escalated as Ukraine prepared for elections and the formation of a new government in which Yuliya Tymoshenko looks set to become prime minister. Russia has been accused of using energy as a foreign policy tool by punishing Ukraine for supporting Tymoshenko, who had a pro-Western stance during the Orange revolution leading to the country's independence from the old Soviet Union.

Contact Uchenna Izundu at uchennai@pennwell.com.

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