Russia Offers Negotiations on Ukraine Gas Price in Return For $2.2Bln Debt Payment

Gazprom pipeline infrastructure. Russia has been playing hardball with Ukraine in negotiations over its gas price.

Russia is ready to discuss a gas price discount for Ukraine if Kiev pays off the $2.2 billion it owed as of April 1, Energy Minister Alexander Novak said Friday, as both sides seemed to edge toward a potential compromise.

"We will discuss this [lowering the rate Russia charges Ukraine] if they pay even the debt owed on April 1, and this was $2.237 billion," Novak said. Russia said Kiev's debt to state-controlled Gazprom is now just over $3.5 billion.

Ukraine's deputy energy minister, Ihor Didenko, said Thursday Gazprom's price of $485 per 1,000 cubic meters was monopolistic and unfair and that Kiev was working on proposals to avoid the gas taps being switched off.

He said that if the price were to be fixed at $268.5 per 1,000 cubic meters Kiev would be prepared to pay around $4 billion before the end of May.

Russia has warned that it will not supply Ukraine with gas in June unless Kiev pays in advance by June 2, raising fears that deliveries to Europe could be affected.

Moscow has cut supplies to Ukraine during price disputes twice in the past decade, leading to reductions in volumes delivered to Europe, which gets about half its Russian gas via transit nation Ukraine.

On Thursday, President Vladimir Putin urged European leaders to do more to help Ukraine through its economic crisis and to resolve the standoff over gas.

Gazprom is demanding a $1.66 billion pre-payment for June deliveries, saying the neighboring country had only half its requirements in storage to ensure a trouble-free winter.

Gazprom said Friday that exports to European consumer nations via Ukraine remained stable, as they have so far during mounting tensions between Moscow and Kiev — and Russia and the West — since the ouster of a Moscow-friendly Ukrainian president in February.

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