i24news

PublishedApril 05th 2014

                                                                         

Ukraine threatens to take Russia to court over gas

PM says two rate increases in three days is an attempt to 'seize Ukraine through economic aggression'

Ukraine on Saturday said it rejected Russia's latest gas price hike and threatened to take its neighbour to arbitration court over a dispute that could imperil deliveries to Western Europe.

Prime Minister Asreniy Yatsenyuk said Russia's two rate increases in three days were a form of "economic aggression" aimed at punishing Ukraine's new leaders for overthrowing a Moscow-backed regime last month.

Russia's natural gas giant Gazprom this week raised the price of Ukrainian gas by 81 percent -- to $485.50 from $268.50 for 1,000 cubic metres -- and now requires the ex-Soviet state to pay the highest rate of any of its European clients.

"Political pressure is unacceptable. And we do not accept the price of $500 (per 1,000 cubic metres of gas)," Yatsenyuk told a government meeting.

"Russia was unable to seize Ukraine by means of military aggression. Now, they are implementing plans to seize Ukraine through economic aggression."

Yatsenyuk said Ukraine was ready to continue to purchase gas from Russia at the old rate of $268.50 because this was "an acceptable price."

But he added that Ukraine must be ready for the possibility that "Russia will either limit or halt deliveries of gas to Ukraine" over the raging gas dispute.

Gazprom's Western European clients saw their deliveries limited in 2006 and 2010 when the energy giant -- long accused of being wielded as a political weapon by the Kremlin against uncooperative neighbors -- halted supplies to Ukraine due to disagreements over price.

Russia's gas meets about a third of EU nations' demand.

Nearly 40 percent of that flows through Ukraine while the remainder travels through the Nord Stream undersea pipeline to Germany and another link that runs through Belarus and Poland.

Ukrainian Energy Minister Yuriy Prodan told the same meeting that Kiev was ready to take Gazprom to arbitration court in Stockholm if Moscow refused to negotiate over a lower price.

"I have firmly said that we are going to try to reach an agreement," said Prodan.

"But if we fail to agree, we are going to go to arbitration court, as the current contract allows us to do," he added. "There is still time to agree with Russia."

Gazprom wants its money back

Earlier, Russian energy giant Gazprom’s deputy chairman, Alexei Miller, said the Ukraine must pay back the full discount it has been granted on Russian gas over the past four years, worth $11.4 billion,

Miller said this week’s annulment of the so-called Kharkiv accords, which gave Ukraine cut-price Russian gas until 2017 in exchange for access to the Crimea’s port facilities, means that Kiev should pay the sum total of this discount back.

“The sum of the discount granted in the time that the Kharkiv accords were valid was $11.4 billion (8.32 billion euros). That is the sum that the Russian government, the Russian budget did not receive,” Miller told Russian television.

The discount was a de-facto advance payment by Moscow for the future lease on Black Sea Fleet’s facilities in the Crimean port of Sevastopol — annexed by Russia with the rest of the peninsula — and so must be paid back, he added.

“Russia was paying for the Black Sea Fleet in Ukraine… towards prolonging the agreement. That is, Russia was paying an advance. Therefore, the $11.4 billion is a debt that Ukraine has accrued to Russia,” he said.

Tensions between Moscow and Kiev have been running high since Russia annexed Crimea last month in defiance of the international community after pro-European demonstrators ousted Ukraine’s pro-Kremlin leaders.

Gazprom is also seeking immediate payment for all recent gas deliveries to Ukraine, valued at over $2.2 billion.

Moscow has repeatedly shown readiness to use gas as a lever in conflicts with Ukraine, which remains dependent on imports from its resource-rich former Soviet master to keep the country running.