Ukraine promises to pay Russia part of gas debt by December

Business Materials 25 November 2008 18:59 (UTC +04:00)

Ukrainian officials on Tuesday promised their government would pay part of a massive debt to Russia for natural gas, reducing chances of a cut off to Europe, reported dpa.

Aleksei Miller, chairman of Russia's natural gas monopolist Gazprom, agreed on repayment terms for the multi-billion dollar debt after talks with Oleh Dubina, chairman of Ukraine's natural gas company Ukrnafta.

Ukraine will pay Gazprom in full for natural gas burned in September, and partially for gas used in October, Russian and Ukrainian news media reported.

Gazprom claims Ukraine owes in total some 2.4 billion dollars. Ukrainian officials concede they owe money but argue the debt is less, some 1.4 billion dollars.

Miller over the weekend threatened another switch off of supplies if Ukraine did not settle its entire debt by the end of December, when the current gas supply contract becomes null and void.

The Russo-Ukrainian dispute over natural gas payments is nearly two decades old. Arguments over future pricing led to a full cut-off of Russian gas supplies to Ukraine for two days in early 2006, leaving Europe, which receives most of its Russian natural gas through Ukrainian pipelines, also without the fuel stream.

Ukraine's cash-strapped government is locked in a fierce internal struggle over responsibility for the gas debt, with President Viktor Yushchenko accusing Prime Minister Yulia Tymoshenko of failing to pay Gazprom so as to finance social programmes, and Tymoshenko accusing Yushchenko of undermining her government's negotiations with Gazprom.

A bone of contention between the Ukrainians and the Russians is the price of natural gas for 2009, with the Russians arguing Kiev should pay around 300 dollars per thousand cubic metres of gas, and the Ukrainians maintaining contract terms allow Russia to charge no more than 180 dollars.

Russia and Ukraine will agree on debt and 2008 pricing terms by the end of the year, and supplies to Europe will continue uninterrupted, Tymoshenko said at a Kiev press conference.

Tymoshenko's government must "resolve the gas crisis immediately ... or the President will step in to do it himself," Yushchenko's office declared in a statement.