Gazprom demands Ukraine gas payments in advance

PanARMENIAN.Net - Russian state gas giant Gazprom said Monday, June 16, it will only ship fuel to Ukraine if it pays in advance, making good on a threat that could lead to supply cuts affecting European customers after late-night EU-mediated talks on debt repayment failed to yield a deal, the Wall Street Journal reports.

Gazprom said it hadn't received payment for a debt it put at $4.458 billion by the Monday deadline it had set. "Ukraine will receive gas only in the amounts it has paid for," Gazprom said.

The shift to prepayment is likely to lead to a reduction in supplies to Ukraine and could affect Russia's shipments to Europe, the bulk of which go through Ukraine. Industry analysts say the initial effect on European markets of any supply disruption may be limited because of current high inventories of gas in storage and lower summer demand.

Ukraine has refused to pay its debts until Gazprom agrees to reduce the price it charges the country to market levels. EU-mediated talks over the weekend failed to reach a deal and European officials blamed Moscow for refusing to concede.

Russia accuses Ukraine of intransigence and says Kiev's price demands are unreasonable. It has sought to reassure its European clients that it intends to meet its contractual obligations.