Russia may resume Ukraine gas supply

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Published Oct 31, 2014

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Moscow - Russia may restart gas supplies to Ukraine as soon as next week if all financial conditions are met, Alexei Miller, head of state gas monopoly Gazprom, said on Friday.

Moscow, Kiev and the European Union clinched a deal on Thursday that would resume supplies of Russian gas to Ukraine over the winter in return for payments funded in part by the Ukrainian government's Western backers.

Gazprom halted supplies to Ukraine in June amid bitter disputes over debts and pricing between Moscow and the former Soviet republic that is now seeking to foster closer ties with the West rather than Russia.

Ukraine is also struggling with a pro-Russian rebellion threatening to split its eastern regions and blames Moscow for fanning the unrest.

Miller said Gazprom would restart supplies to Ukraine after Kiev covers part of its debt for past gas deliveries and provides a pre-payment for supplies that would reach it in November.

“Everything depends on when Ukraine makes this payment. We understand this can happen by the end of next week,” Miller told state TV broadcaster Rossiya 24 in an interview when asked about possible timing for resuming supplies.

Miller said Ukraine must provide $1.45 billion (R16 billion) to cover for part of gas debt and pay $760 million up front for November supplies before supplies resume.

By the end of the year, Kiev must pay a total of $3.1 billion in gas debts for past deliveries, he added.

The deal struck in Brussels on Thursday allows Kiev to use some resources under its existing accords with the EU and the International Monetary Fund to fund the pre-payment. Kiev says it has resources put aside to cover past debts to Gazprom.

Under the Thursday agreement, Ukraine would buy gas for the rest of this year at $378 per 1,000 cubic metres and at $365 in the first quarter of next year.

Russia says that amounts to a $100 discount compared to its previous agreements with Ukraine and Miller said on Friday he expected the Russian government to formally approve that on Saturday. - Reuters

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