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Ukraine and Russia strike gas deal
Moscow to resume gas exports into Ukraine throughout winter despite rivalry in EU brokered deal.
Moscow and Kiev have agreed to a deal that will guarantee that Russian gas exports flow into Ukraine throughout the winter despite their intense rivalry over the fighting in eastern Ukraine.
In a signing ceremony on Thursday following protracted negotiations, the two sides promised to get the gas flowing into Ukraine again after a long and bitter dispute over payments.
European Union energy chief Guenther Oettinger said that “we can guarantee a security of supply over the winter,” not only for Ukraine but also for the EU nations closest to the region that stood to suffer should the conflict worsen.
Jose Manuel Barroso, the president of the European Commission, announced the “very important agreement” between the two sides.
| There is now no reason for people in Europe to stay cold this winter |
“There is now no reason for people in Europe to stay cold this winter,” he said.
The agreement long hinged on the question whether Ukraine was in a position to come up with the necessary cash to pay for the gas. But a confident Oettinger said “yes, they are”.
He said the $4.6bn deal should extend to the spring. Oettinger said it was “perhaps the first glimmer of a relaxation in the relations between neighbours”.
Tumbling oil prices
Ukrainian Prime Minister Arseniy Yatsenyuk said the amount his government would pay for Russian gas would fall in line with global oil prices, which have tumbled in recent weeks.
Yatsenyuk said at a Cabinet meeting in Kiev that Ukraine could pay $365 per 1,000 cubic metres from the start of next year, down from the $385 rate agreed earlier this month. He said that figure may be adjusted downward to $378 until the end of the year.
Russian President Vladimir Putin and his Ukrainian counterpart, Petro Poroshenko, agreed earlier this month on the broad outline of a deal, but financial issues, centering on payment guarantees for Moscow, have since bogged down talks.
But with each week, the need for a resolution becomes more pressing, since winter is fast approaching in Ukraine, where temperatures often sink below freezing for days.
Russia cut off gas supplies to Ukraine in June after disputes over Russia’s annexation of Crimea in March. Ukraine has since been relying on gas transfers from other European countries and its own reserves.
On Wednesday, Barroso conferred “a number of times” with Poroshenko in Kiev, stressing that “an agreement was within reach,” according to a Commission statement.
The EU has said previously that Ukraine would settle its energy debt to Russia with a $1.45bn payment by the end of the month and $1.65bn more by the end of the year.
The EU also said that Ukraine would pay $385 per 1,000 cubic metres for news gas deliveries, which Russia should deliver following advance payments by Ukraine.
2 Comments on "Ukraine and Russia strike gas deal"
Davy on Fri, 7th Nov 2014 7:08 am
With war drums beating again how long will this agreement hold up? War has a particular way of destroying agreements whether paid for or not. Russia could always play the US game and declare sanctions. Instead of financial and trade sanctions they can effectively manipulate energy. Why not? it is all part of the same game of trade wars.
I am with Russia on the energy game. Europe and Ukraine cannot have something for nothing. You cannot have your cake and eat it. If Europe is disgusted with Russian actions bite the bullet and hunker down in a crisis situation with unstable energy sources until adjustments can be made. Instead Europe is doing the usual European muddle game of being high and mighty on the surface but underneath being weak and divided.
The US in this situation is just a spoiler and a poor one at that. The US exposure to Europe is such that any major crisis in Europe will be a US contagion. This whole fight is very dangerous. It is a potential black swan that will only hurt all parties involved. In fact it could be a global contagion through a trade war or God forbid, a hot war that surely will disrupt the global system beyond repair.
JuanP on Fri, 7th Nov 2014 8:50 am
This article contains many inaccuracies and inconsistencies. I am disappointed in AlJazeera, they usually do better work.
Ukraine has already paid $1.45 billion for the gas it used in Nov-Dec 2013. It will supposedly pay another $1.5+ billion of its gas debt by the end of the year. The gas they buy from Russia will be prepaid. The price and terms are exactly the same that Russia demanded months ago.
Russia got everything it wanted. There was never another choice, Ukraine does not have any other choice.
The people ruled by the Kiev Nazi junta get more subsidized gas for the winter with the European and American taxpayers footing most of the bill. Not a bad move for the oligarchs put in place by the Western backed sniper coup or the people.
I am glad that the Kiev Nazis are too weak and poor and can’t attack Novorossiya until the spring. That they will attack again is almost certain, as soon as they can. These murderers can’t wait to ethnically cleanse all of Eastern and Southern Ukraine.
All the governments allied with the sniper coup installed Nazi regime in Kiev have the blood of innocent people, including women and children in their hands.