A gas pipe is pictured at an underground gas storage facility in the village of Mryn, 120 km (75 miles) north of Kiev May 21, 2013. REUTERS/Gleb Garanich
Thomson Reuters
FileA gas pipe is pictured at an underground gas storage facility in the village of Mryn.
KIEV (Reuters) - Ukraine's state-run energy company Naftogaz has suspended gas payments to Russia until the conclusion of price talks, chief executive Andriy Kobolev was quoted as saying on Saturday.
Russia, which last month angered Western powers by annexing Ukraine's Crimea peninsula, has raised the price it charges Kiev for gas and said it owes Moscow $2.2 billion in unpaid bills. It also says Kiev had failed to pay its bill on time.
Russian gas giant Gazprom <GAZP.MM> earlier this month increased gas price for Ukrainian consumers to $485 per 1,000 cubic meters (tcm) from $268 for the first quarter, saying Kiev was no longer eligible for previous discounts.
"The question of repayment of debt is directly linked to the maintenance of gas prices at the level of the first quarter," Kobolev told the Zerkalo Nedely weekly in an interview, referring to the original price of $268 per tcm.
"We see no reason to revise the price. We consider the price at around $500 as non-market, unjustified and unacceptable. Accordingly, we have suspended payments for the period of the price negotiations."
Kiev gets about half of its gas from Moscow and a large proportion of Europe's gas is pumped from Russia via Ukraine.
High debts, which could justify a reduction in gas shipments to Ukraine, have raised the spectre of a repeat of previous "gas wars", when disputes between the two former Soviet republics led to a cut in onward supplies to western Europe.
A repeat could hurt Russia as its public revenues depend on selling gas to Europe.
Russian President Vladimir Putin warned on Thursday that Moscow could cut off gas to Ukraine, potentially threatening European supplies, but later played down the threat.
"I want to say again: We do not intend and do not plan to shut off the gas," he said on Friday.





So who holds the gas bag ?








Europe Folds As Putin Tells It To Pay Ukraine's Gazprom Bill, Or Else

Tyler Durden's picture





Another day ending in "y" means another day in which Putin plays the G(roup of most insolvent countries)-7 like a fiddle.
The latest: Europe should provide aid to Ukraine to ensure uninterrupted natural-gas deliveries to the region, President Vladimir Putin’s spokesman said as reported by Bloomberg.
"Russia is the only country helping Ukraine’s economy with energy supplies that are not paid for,"  Dmitry Peskov told reporters today in Moscow,  commenting on President Vladimir Putin’s letter yesterday to 18 European heads of state. “The letter is a call to immediately review this situation, which is absurd on the one hand and critical on the other.
Said otherwise: PUTIN SAYS EUROPE GAS TRANSIT DEPENDS ON UKRAINE: IFX
Or, as we explained yesterday, Russia is quite happy to keep the EU gas flowing...as long as Ukraine has enough gas in storage to assure Gazprom it won't syphon off gas destined for Europe. So how much gas does Ukraine need to pre-stock? About $4-5 billion worth. The problem is that Ukraine doesn't have a dime to spend on gas.
So putting the question aside if Ukraine will or won't import even one bcf of Russian gas ever again (thanks to some fracking or US natgas exporting magic), what Putin just said is that if Europe wants an uninterrupted supply of gas it better find a way to fund Ukraine to the tune of up to $5 billion, or else the gas may just get shut off.
And guess what: Putin is about to win yet again:  
European Energy Commissioner Guenther Oettinger is working on a plan to help Ukraine pay some of its gas bills to Russia, he told Austria's ORF radio on Friday, saying there was "no reason to panic" about Russian gas supplies to Europe.

"We are in close contact with Ukraine and its gas company to ensure that Ukraine remains able to pay and the debts that the gas company has to Gazprom do not rise further," he said, adding he would meet Ukraine's energy and foreign ministers on Monday.

"I am preparing a solution that is part of the aid package that the IMF, the European Union and the World Bank is giving to Ukraine and from which payment for open bills will be possible."
The chess game continues: Putin X+1 - Pigeons 0 








Russia sets 4 conditions in return for aid to Ukraine

Published time: April 12, 2014 10:48
Activists and communal workers dismantle the barricade set on Maidan square during the mass protests of pro-EU opposition against President Viktor Yanukovych regime in  Kiev on April 10, 2014. (AFP Photo / Sergei Supinsky)
Activists and communal workers dismantle the barricade set on Maidan square during the mass protests of pro-EU opposition against President Viktor Yanukovych regime in Kiev on April 10, 2014. (AFP Photo / Sergei Supinsky)
Ukraine should recognize Crimea’s independence, reform the country’s constitution, regulate the crisis in its eastern regions and guarantee the rights of Russian speakers if it wants to get financial help from Moscow, Russia’s finance minister has said.
“If Ukraine fulfills these four conditions, then Russia will be able to propose further steps on additional help both on financial and gas issues,” Finance Minister Anton Siluanov said after meeting with his German counterpart, Wolfgang Schauble, in Washington.
Deescalating tensions in eastern Ukraine should be peaceful, based on Ukraine’s legislation,“without discrimination against Russian-speaking population, without victims and bloodshed,”Siluanov said.
It is necessary for Ukraine to conduct constitutional reform, hold legitimate presidential elections and “form a government with which one may negotiate,” he said.
Finance Minister Anton Siluanov (RIA Novosti / Vladimir Fedorenko)
Finance Minister Anton Siluanov (RIA Novosti / Vladimir Fedorenko)

Ukraine’s gas debt is now estimated at over $2.2 billion. On Thursday, President Vladimir Putinwrote letters to the leaders of 18 European countries, including Germany and France, warning that Ukraine’s debt crisis had reached a “critical” level and could threaten transit to Europe. He also called for urgent cooperation, urging Russia’s partners in the West to take action.
According to German Chancellor Angela Merkel "there are many reasons to seriously take into account this message […] and for Europe to deliver a joint European response.”
In total, Moscow has subsidized Ukraine’s economy to the tune of $35.4 billion, coupled with a $3 billion loan tranche in December. Due to Ukraine’s gas debts, Gazprom revoked all discounts and is now charging $485 per 1,000 cubic meters of gas, a price Ukraine says it will not be able to pay.
Pro-Russian activists rally at a barricade outside the regional state administration in the eastern Ukrainian city of Donetsk on April 11, 2014. (AFP Photo / Anatolii Stepanov)
Pro-Russian activists rally at a barricade outside the regional state administration in the eastern Ukrainian city of Donetsk on April 11, 2014. (AFP Photo / Anatolii Stepanov)

The deteriorating economic situation is coupled with escalating tensions in Ukraine. The country’s Interior Ministry promised a harsh response to the riots in the east, especially in the “separatist regions” of Donetsk, Lugansk and Kharkov. The coup-appointed authorities said they would arrest all violators, "regardless of the declared slogans and party affiliation."
Eastern and southern Ukraine have been showing discontent with the new government in Kiev for weeks. Tensions escalated Monday when protesters in several cities started seizing local administration buildings. Major protests took place in the cities of Donetsk, Kharkov and Lugansk, while smaller actions and some clashes were reported in Odessa and Nikolayev.
After Donetsk activists proclaimed the region independent and demanded a referendum on its future status, Ukraine’s coup-imposed president Aleksandr Turchinov ordered the sending in of armed personnel and armored vehicles to the east.
At least 70 activists have been arrested in the course of the crackdown launched by Ukraine’s Interior Ministry in the eastern city of Kharkov. Most of them remain in prison, with 62 people detained for at least two months.

Sanctions are ‘counterproductive’ for all

At the G20 finance ministers’ meeting in Washington, sanctions against Russia’s alleged interference into Ukraine’s affairs dominated the background. While speaking with journalists, Siluanov said that he was against US and EU sanctions against Russian and that the widening of such sanctions would be “counterproductive” for all sides.
In the latest series of sanctions, leading Crimean officials were targeted; those, according to the US Treasury, who were responsible for organizing the March 16 referendum, which led to the peninsula leaving Ukraine and joining Russia.
Among the seven officials forbidden from entering the US or engaging in economic activity with America-based companies are acting Sevastopol governor Aleksey Chaliy, the head of the Crimean security service Pyotr Zima, and Mikhail Malyshev, the head of the electoral commission that oversaw the poll.
Additionally, US-based assets of Chernomorneftegaz, the former subsidiary of the Ukrainian state gas company located on the Crimean peninsula, will be frozen.
The US, the EU and several international groups have imposed sanctions on senior Russian officials. The US also introduced measures including a ban on exporting defense items and services to Russia to pressure Moscow over recent events in Ukraine.
Supporters of the detained pro-Russian protesters shout slogans as they gather in front of the court building in Kharkiv, April 10, 2014. (Reuters / Gleb Garanich)
Supporters of the detained pro-Russian protesters shout slogans as they gather in front of the court building in Kharkiv, April 10, 2014. (Reuters / Gleb Garanich)

The G7 group has voiced its readiness to introduce additional sanctions against Russia, if Moscow continues to “escalate” the turmoil in neighboring Ukraine, US Treasury Secretary Jack Lew said.
Meanwhile, the Russian Foreign Ministry and parliament have repeatedly denounced the policy of sanctions as inappropriate and counter-productive.
Some Russian MPs have suggested the possibility of retaliatory sanctions against US businesses, but these ideas have not been implemented as they might harm all the countries.
“Sanctions hurt all countries. We do not intend to introduce reciprocal sanctions,” Deputy Prime Minister Igor Shuvalov told reporters during the International Eastern Forum in Berlin.
Meanwhile, the meeting between Russia, Ukraine, EU and the US to discuss the ongoing political crisis in Ukraine will take place on April 17 in Geneva, the office of EU foreign policy chief Catherine Ashton said. Proposals for Ukraine’s constitutional reforms will also be presented in Geneva. However, Russian FM Sergey Lavrov on Tuesday expressed concern that Ukraine’s southeastern regions were not being invited to take part directly in the discussions on a new constitution for the country.
Siluanov said that similar concerns were voiced on Friday during a meeting with Treasury Secretary Lew.
He added that “Russia is ready to participate in supporting Ukraine together with the IMF and the European Union.” He also told Lew that Russia was concerned about Ukraine’s unpaid debt for supplies of natural gas.