Ukraine must pay $7bn for unused gas, Gazprom says

PanARMENIAN.Net - Ukraine must pay $7 billion for using less gas than it was contracted to buy, Gazprom Deputy CEO Alexander Medvedev said on Friday, Feb 15, according to RIA Novosti.

“I can’t imagine even in my wildest dreams Ukraine will refuse to fulfill its obligations. The 'take or pay' principle means you have to pay even if you don’t want to,” Medvedev said in an interview with The Financial Times.

The penalties Gazprom has demanded from Ukraine are considerably less than stipulated in the 2009 gas deal between the two countries, Medvedev said.

Under that deal, Ukrainian national energy company Naftogaz must buy at least 42.5 billion cubic meters of gas annually, but the company bought only 24.9 billion cubic meters, or about 60 percent of the contracted volume, Medvedev said.

Naftogaz says it warned Gazprom in advance that it intended to buy less than the contracted amount of gas, but that has no significance, Medvedev said.

Gazprom handed over a $7 billion bill to Naftogaz Ukraina for unused gas in January 2013, a move rejected by Ukraine as “unjustified.”

Ukraine has long sought to alter the terms of the 2009 gas deal. The deal ties the price of gas to that of oil, which has risen sharply since 2009, boosting Ukraine's gas bill. Kiev insists the price and volume of its gas imports should be reduced.

Ukraine has begun diversifying its gas supplies, including buying gas from Europe, in a bid to lessen reliance on Russian deliveries. It is also trying to restore direct imports from Turkmenistan, from which it formerly bought gas until 2006.