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According to recently voiced assessments, Ukrainian state energy company Naftogaz’s debt to Moscow stood at some $3.508 billion with the gas price at $485.5 per 1,000 cubic meters.
European Commissioner for Energy Guenther Oettinger said in late May during three-party gas talks involving Russia, Ukraine and the European Union that Naftogaz is ready to transfer $2 billion and later $500 million as down payments for its debt to Gazprom.
Moscow recently substantially raised the price for gas supplied to Ukraine from the figure of $268.5 per 1,000 cubic meters agreed last year when an association agreement with the European Union was shelved in November 2013.
The price rose due to the return to earlier contract agreements, as Ukraine failed to pay for supplied volumes of Russian gas in time and due to denunciation of the Kharkiv Accords with Ukraine in early April, which had been struck in 2010.
The Kharkiv deals stipulated that Russia’s lease of naval facilities in Crimea (then part of Ukraine) would be extended by 25 years beyond 2017 - until 2042. The agreements envisioned a gas supply discount. Now that Crimea has become part of Russia, the discount is no longer applied.
Ukraine saw a coup in February, with new people brought to power amid riots as president Viktor Yanukovych had to leave the country citing security concerns. Crimea refused to recognize the new Kiev authorities and seceded from Ukraine to join Russia after a referendum in March.
Despite Moscow’s repeated statements that the Crimean referendum on secession was in line with the international law and the UN Charter and in conformity with the precedent set by Kosovo’s secession from Serbia in 2008, the West and Kiev have refused to recognize the legality of Crimea’s reunification with Russia.
Kiev recognizes a debt of $2.237 billion as of April 1 but does not start paying it off because it believes the price should remain at $268.5 per 1,000 cubic meters.
Ukraine hopes to annually obtain about 10 billion cubic meters of gas through gas reverse supply schemes from Slovakia, Poland and Hungary. In this way, Ukraine can only cover a third of its Russian gas imports due to supplies from Europe.