Energy giant sets payment deadline and warns Europe it risks “severe problems” in winter unless it helps Ukraine pay $8.5bn gas bill this summer.
Russian state-controlled energy giant Gazprom has ratcheted up the pressure on Ukraine, issuing a May 7 ultimatum to settle $3.5bn unpaid debts or start paying in advance for its gas.
Alexander Medvedev, deputy chief executive, warned that Europe must help Ukraine pay the bill – and a further $5bn needed to refill storage facilities this summer – or face “severe problems” with gas supplies this winter.
By May 7, Ukraine would owe about $3.5bn for gas it has used in recent months, Mr Medvedev said. If it failed to pay, Gazprom would stop supplying Ukraine with gas for domestic usage from June, unless it paid for it in advance.
“If they don’t pre-pay they are not entitled to get any gas,” he told reporters in London.
About 30 per cent of European gas comes from Russia and roughly half of it passes through the Ukraine under transit agreements.
Mr Medvedev said Gazprom would continue to supply the gas destined for transit to Europe, but said Ukraine may siphon off gas to meet its domestic needs.
He warned that in winter, when demand is high, the consequences would far more severe because Ukraine’s pipeline system cannot physically import enough gas from Russia to meet its domestic needs as well as its transit commitments.
Ukraine therefore needs to buy a further $5bn of gas over the summer to stockpile in storage facilities, ready to meet winter demand.
If it fails to do so, Europe’s winter supplies will be threatened because Ukraine will likely siphon off supplies from Russia to meet domestic demand and fail to honour its transit commitments, Mr Medvedev said.