Paying for Ukraine’s gas still obstacle in trilateral talks

Russia, Ukraine and the EU failed to come to a final agreement about Russian natural gas deliveries to Ukraine this winter on Tuesday night as the question about how Ukraine will get the cash to pay for gas deliveries this winter remains unanswered.

The EU and Ukraine want to plug the financial gap over the coming days before a new round of trilateral talks will be held on 29 October in Brussels.

The parties agreed that Ukraine will have to pay $385(301)/kcm for gas deliveries between November and March, European Commissioner for energy Gunther Ottinger said in a press conference after the talks on Tuesday night.

This price is guaranteed and cannot be changed by one side alone by for example imposing tariffs, he added.

While it is up to Ukraine to request the volumes of gas needed for this winter it will have make monthly payments for this amount in advance in cash. Only then will state-owned Russian gas producer Gazprom deliver the volumes.

Ukraine estimates that it will need an additional 4 billion cubic metres of gas this winter from Russia, according to the European Commission.

In that case, Ukraine would need to raise $1.45bn, most likely from the EU or other international organisation such as the International Monetary Fund. “On side of the EU, we will work over the next five working days to clear up what volumes of gas can be ordered and also paid for this year,” Ottinger said.

On top of the money for the additional gas volumes this winter, the parties also agreed that Ukraine will pay its debt of at least $3.1bn for previous deliveries. The exact amount depends on what delivery price is used to calculate it and could be revised following an expected decision by an international court in Stockholm, Sweden.

As it stands, Ukraine would settle this debt through payments in two tranches of $1.45bn by the end of October and $1.65bn by the end of the year, the European Commission said in a statement on Tuesday. Martin Degen