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Gazprom Chief Confirms New Deal With Ukraine

April 02, 2015

The head of Russian gas giant Gazprom has confirmed the signing of an agreement on gas supplies to Ukraine for the next three months.

Gazprom CEO Aleksei Miller said Kyiv will pay $247.18 per 1,000 cubic meters of gas in the second quarter under the deal with Ukrainian state energy company Naftogaz.

The agreement extends an EU-brokered 'winter package' that was signed in October and expired on March 31.

Miller said Gazprom would not insist on a 'take-or-pay' arrangement requiring Ukraine to pay for gas regardless of whether it uses it. He called that clause a 'stumbling block' to negotiations.

Ukraine still must pay in advance for Russian gas supplies.

The 'winter package' led to the resumption of deliveries to Ukraine months after Gazprom turned off the taps in a price and debt dispute that was exacerbated by a series of geopolitical events: the ouster of Ukrainian President Viktor Yanukovych in February 2014; Moscow's takeover of Crimea in March; and Russia's support for armed separatists who have seized parts of eastern Ukraine.

The dispute raised fears of reduced deliveries to the European Union, which gets about 40 percent of the gas it imports from Russia via pipelines crossing Ukraine. Gazprom supplies about half the gas used in the EU.

In a statement posted on his ministry's website earlier on April 2, Ukrainian Energy Minister Volodymyr Demchyshyn called the agreement a 'victory' for an economic rather than a political approach to relations between Naftogaz and Gazprom.

Successive Ukrainian governments have said a 10-year gas agreement signed in 2009 locked Kyiv into prices far above market levels, and Kremlin critics say Moscow has used the deal as a lever of pressure on Ukraine and the EU.

Yanukovych, in favor with Russian President Vladimir Putin after he spurned a landmark pact to bring Ukraine closer to the EU in November 2013, reached a deal with Moscow in December to purchase gas for $285 per 1,000 cubic meters.

But after Yanukovch was pushed from power by protests touched off by his turn away from Europe, Russia demanded $485 as well as full payment of Ukraine's multibillion-dollar gas debt.

Russia stopped supplying gas to Ukraine in June, citing debt and a lack of advance payments, as the conflict in eastern Ukraine escalated.

Global prices for oil have fallen precipitously after reaching a high for 2014 in June, driving gas prices down and weakening Russia's hand in negotiations with Ukraine over supplies.

With reporting by Reuters, UNIAN, TASS, and Interfax

Source: http://www.rferl.org/content/ukraine-new- gas-deal-russia/26934271.html

Copyright (c) 2015. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036.

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