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Ukraine coughs up to end Russian gas row



By Upstream staff 

Ukrainian President Viktor Yushchenko said today that Ukraine had paid its arrears to gas giant Gazprom, adding that all issues concerning payment for 2007 gas imports from Russia had been resolved.

In Moscow, Gazprom said payment had been received for last year's supplies, but described the state of supplies for 2008 as "acute" as no contract had yet been signed.

Yushchenko said payment of arrears totalling 2.2 billion hryvnias ($435 million) had been made late last night, adding he had made clear Ukraine's position in a conversation with Russian President Vladimir Putin.

"At the point when our conversation took place, the main problem with payments for 2007 has been eliminated," Yushchenko said in a statement appearing on the presidential website.

Yushchenko also hit out at Prime Minister Yulia Tymoshenko's government, claiming it was operating in "emergency mode" - a reference to delays in paying off arrears.

Yesterday Gazprom said it believed 1.9 billion cubic metres of gas had gone missing and were now considered Ukrainian debt. It said supplies would be reduced by 25% from 3 March unless arrears were paid off, its second such threat in a month.

Gazprom acknowledged payment today. But Gazprom spokesman Sergei Kupriyanov told Reuters settling the arrears was "not an exploit. There is nothing to be proud of."

He added: "Meanwhile the problems with gas supplies in 2008 are becoming more acute.

"No contracts have been signed so far for deliveries of Russian and Central Asian gas, which means Ukraine is increasing consumption of non-contracted gas."

Gazprom has often threatened to cut gas supplies during disputes over price with former Soviet neighbours Ukraine and Belarus, but has never made good on the threats except in 2006.

That disruption cut supplies to Gazprom's west European customers, making them wary of any hint of any new row. A quarter of Europe's gas needs pass through Ukraine.

Earlier today Ukraine's Fuel & Energy Minister Yuri Prodan said a new payment of 2.4 billion hryvnias ($475 million) had been made for gas consumed last year.

He said any more issues over payment for 2007 "must be considered a closed matter". First Deputy Prime Minister Oleksander Turchynov then told a Cabinet meeting there could be no further discussion of arrears.

A spokesman for Ukrgazenergo confirmed payments were being processed. The company is one of the intermediaries that secures gas from Gazprom through another go-between called RosUkrEnergo.

The full text of Yushchenko's statement is available here in Ukrainian, Russian and English.


Wednesday, 27 February, 2008, 10:40 GMT  | last updated: Wednesday, 27 February, 2008, 11:30 GMT

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