Ukraine Boosts Russian Gas Imports as Prepayment Threat Looms

Apr 21, 2014 3:30 am ET

April 21 (Bloomberg) -- Ukraine is boosting natural-gas imports from Russia to the highest in 10 weeks after President Vladimir Putin gave the country one month to resume payments or have to start prepaying for the fuel.

Ukraine imported almost 115 million cubic meters of gas from Russia on April 19, the most since Feb. 5, preliminary data from the Russian Energy Ministry’s CDU-TEK unit show. That compares with 40 million cubic meters on April 16, before Putin’s statement. The daily average in April last year was about 49 million cubic meters, according to Ukrainian Energy Ministry data.

Ukraine depends on Russian gas for half of its domestic needs and carries about 15 percent of Europe’s supply through its pipelines from Russia, making energy a key component in the international tensions over the smaller country’s future.

OAO Gazprom, Russia’s state-controlled gas exporter, is supplying fuel to Ukraine with little chance of receiving payment on more than $2.2 billion already owed to it, Dmitry Peskov, Putin’s spokesman, said April 11.

Russia “is ready to wait for a month” after not receiving “a single ruble or dollar” from Ukraine for March deliveries, Putin said April 17 during an annual call-in show.

Gazprom’s contract signed with Ukraine in 2009 stipulates a move to advance payments if the country falls behind on paying for supplies. That agreement ended a pricing dispute that led Gazprom to halt deliveries to Ukraine, which disrupted transit flows to Europe for about two weeks during freezing weather.

Europe-Bound Gas

Sergei Kupriyanov, Gazprom’s spokesman, didn’t immediately comment about the increase in imports when reached by phone. Aliona Osmolovska, a spokeswoman for NAK Naftogaz Ukrainy, declined to comment by phone.

Gas supplies to Ukraine and fuel transit to Europe through Ukrainian pipelines are proceeding as normal, a different Gazprom press official said by phone, without elaborating and asking not to be identified in line with corporate policy.

Ukraine is seeking to diversify energy supplies by buying gas from Slovakia, Poland and Hungary using east-west pipelines in reverse. Fuel supplies from Poland started on April 15, at levels amounting to about 3 percent of the former Soviet republic’s domestic consumption. Talks on additional volumes from other countries are still in progress.