Russia, Ukraine Should Settle Gas Dispute Out of Court – Ambassador

KIEV, November 22 (RIA Novosti) – Russia and Ukraine should settle their gas dispute through negotiations, Russian Ambassador to Ukraine Mikhail Zurabov said on Thursday, after Kiev announced it intended to cut gas imports below contracted volumes.

The issue of Ukraine’s obligatory gas imports was discussed by Russian Prime Minister Dmitry Medvedev and his Ukrainian counterpart Mykola Azarov at their meeting on Wednesday, the ambassador said.

“The negotiations are ongoing and I don’t think the matter will need to be considered in judicial proceedings,” he said.

“As of today, we expect Ukraine’s gas consumption to be within 27-28 billion cubic meters.”

Ukraine has said that, due to high prices, it would slash gas imports from the contracted 52 billion cu m to just 27 billion cu m, possibly as early as this year. Russia’s position is that the contracted volume for this year is already fixed and that no alterations can take place within six months of the contracted delivery date.

Ukrainian energy company Naftogaz’s Deputy Director Vadim Chuprun said on Friday that Ukraine planned to cut gas imports from Russia to just 20 billion cu m next year.

Ukrainian Energy Minister Yuriy Boyko described moves to slash Russian gas imports as breaching the terms of the contract, and that this would lead to a dispute with Russia but added that Kiev would safeguard its interests, including through the law.

Gazprom’s long-term contract with Naftogaz contains a “take-or-pay” provision that applies to 80 percent of the contracted volumes for a given year. That means Ukraine must pay for at least 41.6 bcm of gas this year (based on the entire contracted volume of 52 bcm), even if it takes less.

The Russian ambassador said the two countries had intensified their negotiations to reach new gas accords.

“The dialog is proceeding and at this stage it seems to differ seriously by content from what was even a month ago,” he said.

Ukraine has spent many years locked in dispute with Russia over gas deliveries and prices, and at times European supplies have been affected.

Most recently Ukraine has been attempting to alter the terms of the 2009 gas deal it signed with Russia. The deal ties the price of gas to oil prices, which have risen steeply since 2009, boosting Ukraine’s gas bill.

Naftogaz Ukrainy imported Russian gas at $416 per 1,000 cubic meters in the first quarter of this year, around $425 in the second quarter, $426 in the third quarter and will have to pay around $430 in the fourth quarter.


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