European Consumers to Receive Russian Gas in Full Volume

MOSCOW, June 16 (RIA Novosti) — European consumers will receive Russian gas deliveries in their full volume, Gazprom spokesman Sergei Kupriyanov said Monday.

“It should be noted that the volumes of gas intended for European consumers will be delivered in full compliance with the contracts,” Kupriyanov said.

The statement followed Russia gas giant Gazprom’s decision to implement a prepayment plan for the delivery of Russian fuel to Ukraine at 10:00 a.m. local time (06:00 a.m. GMT) on Monday after putting it off several times this month. Gazprom said Naftogaz’ arrears for Russian gas deliveries stood at $4.458 billion.

The gas pipelines that deliver Russian fuel to Europe partially lie through Ukraine. Russia is in the process of constructing a new pipeline – South Stream – that would deliver gas to Europe bypassing Ukraine starting in the first quarter of 2016. The pipeline will become fully operational in 2018.

Europe gets a third of its oil and gas from Russia. Due to the escalation of the crisis in Ukraine and strained relations between Kiev and Moscow after Crimea joined Russia in March, both Ukraine and Europe started looking into ways to cut their dependence on Russian energy supplies.

Ukraine’s gas debt to Russia has been building up since 2013 as the country found itself amid a deep political crisis. Naftogaz’ discounted rate was scrapped in April after Kiev failed to deliver on its debt, which now accumulates at a rate of some $1 billion per month.

Starting Monday, the Ukrainian company will only receive the amount of gas it will have paid for in advance. No payments have been received for June preliminary bill, yet. The latest price proposed by Russia stands at $385, which is the average market price Gazprom offered Kiev after axing a deal to subsidize gas exports to Ukraine.

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