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Ukraine says it will pay off gas debt

Ukraine says it will pay off gas debt

Ukrainian gas company Naftogaz said Tuesday it would pay $1.5 billion to settle its debt for Russian gas imports and avoid a threatened New Year's cutoff of natural gas deliveries.
But it was unclear whether this would satisfy Russian gas company Gazprom, which says Ukraine owes significantly more.
Ukraine's announcement comes during a bitter confrontation between the two neighbors that has threatened to disrupt supplies to Europe as happened during a similar dispute three years ago.
State-owned Gazprom supplies a quarter of the gas used by EU nations, and around 80 percent of it goes through Ukraine.
Earlier Tuesday, Gazprom said it would stop energy shipments to Ukraine and sharply raise the price for future deliveries if it didn't pay the debt by Wednesday.
Naftogaz spokesman Valentyn Zemlyansky told The Associated Press the company will take loans from Ukraine's two biggest state-run banks, Oshchadbank and Ukreksimbank, to pay off the debt. Zemlyansky said $1.5 billion was to be transferred Tuesday.
Zemlyansky added, however, that while agreeing to pay off the debt, Naftogaz will not immediately pay fines it owes for accumulating the debt. "The debt and the fines are two separate things," Zemlyansky said.
Gazprom said Ukraine owes $1.7 billion for gas, plus $450 million in fines.
Gazprom spokesman Sergei Kupriyanov had little immediate comment.
"We haven't seen the money yet, so there is nothing to talk about," he said by telephone.
Ukraine's announcement came after the close of banking hours Tuesday, so it may only become clear on Wednesday whether the money had reached Gazprom's accounts.
Ukraine's President Viktor Yushchenko said that Ukraine considered the debt "fully settled," according to a statement on the presidential Web site.
Kremlin spokesman Alexei Pavlov said he did not know whether the offer would suit Gazprom, but added that "we always welcome any mutually beneficial decisions."
Russian President Dmitry Medvedev on Nov. 20 ordered Gazprom chief executive Alexei Miller to recoup the debt, saying in a televised Kremlin meeting the figure was "a lot of money for any state and for any company."
Miller held negotiations Tuesday with Naftogaz head Oleh Dubina, according to Kupriyanov, who said various options for the debt settlement had been discussed.
Naftogaz's promised payment also leaves unanswered the crucial issue of how much Ukraine will pay for future gas deliveries. The former Soviet republic, crippled by a devastating financial crisis, is trying to resist a move by Gazprom to more than double next year's price for gas to $418 per 1,000 cubic meters.
Ukraine insists the price should be significantly lower, but Kupriyanov has said Ukraine had to pay off its debt first before it can negotiate a lower price.
While Gazprom's European customers now pay the higher price, the cost of gas is expected to fall sharply in coming months as a result of the steep drop in the price of oil.
For months, Russia and Ukraine have been locked in a dispute over past and future natural gas shipments from Gazprom, which has seen the value of its stock slip by almost 75 percent since the beginning of 2008.
Gazprom's net earnings climbed to $10.2 billion in an unaudited 2008 first-half earnings report released Tuesday. The same report showed the company's total debt at 836.9 billion rubles ($28.5 billion) on June 30, down from 1.2 trillion rubles at the end of 2007. But that was before the fall in the price of oil and before the credit crunch hit Russian companies such as Gazprom.
Gas analysts noted that Gazprom reviews gas prices in its European contract every quarter to reflect changes in energy prices. Valery Nesterov, a gas analyst with Troika Dialog, predicted that Ukraine may agree to the $418 price in the short run, expecting the price to decline in the future.
"It would be hard for Ukraine to come to terms with $300 to $400, but in the next three or five years we are not going to see this level of prices," Nesterov said.
Associated Press Writer Nataliya Vasilyeva in Moscow contributed to this report.


Updated : 2021-05-10 07:22 GMT+08:00