By August 28, 2015 Read More →

Ukraine asks for lower Russian gas prices after debt writedown

Ukraine and Russian gas disputes have led to supply cut-offs in the past

Russian gas

Ukraine Prime Minister Arseniy Yatsenyuk is looking to pre-pay for Russian gas for the winter and get a sizeable discount. photo.

MOSCOW¬†–¬†Emboldened by a deal with international creditors to write down part of its debt, Ukraine on Friday asked Russia for lower gas prices for the winter season.

Gas disputes between Russia and Ukraine have led to cut-offs of supply in the past, and one standoff in 2009 caused serious disruptions in gas flowing from Russia via Ukraine to the European Union.

Russia and Ukraine last year struck an emergency deal on prices through the winter. That deal has expired, however, and the sides have to hold new talks if Ukraine is to receive more Russian gas.

Prime Minister Arseniy Yatsenyuk said on Friday he is convinced that Kyiv and Moscow should go back to the last winter deal, which saw Ukraine pre-pay for gas but receive a sizeable discount.

“We are convinced that the only mechanism to ensure a gas transit to the EU as well as stable supplies to Ukraine is applying the same mechanism that was worked out last year between the EU, Ukraine and Russia,” he said in comments released by his press office.

Under a deal reached last November, Ukraine agreed to buy gas from Russia at $385 per 1,000 cubic meters. On top of that, Russia offered a 30 per cent discount of the contract price, which was worth up to $100 off per 1,000 cubic meters, depending on the fluctuations in global energy prices.

The Ukrainian government on Thursday reached a deal with its international bondholders to lighten its public debt burden. It will see the creditors write off 20 per cent of their bond holdings, shrinking $19 billion in sovereign debt to $15.5 billion.

Russian creditors did not take part in talks, but Ukrainian Finance Minister Natalie Jaresko on Thursday insisted that Moscow should accept the same terms because “it would not get a better deal” than Ukraine’s other creditors.

Moscow insists that it wants to be fully repaid for a $3 billion loan it gave to Ukraine. The debt is due at the end of the year.

Speaking to reporters late Thursday, Russian Finance Minister Anton Siluanov noted that Russia’s loan “was not a commercial one. We provided funds for Ukraine with a below-market interest rate.”

The Canadian Press

Posted in: Energy Financial

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