Sat, Apr 05, 2014 - Page 15 News List

Russia raises gas prices for Ukraine twice in one week

Reuters, MOSCOW and KIEV

Russia raised the gas price for Ukraine on Thursday for the second time this week, almost doubling it in three days and piling pressure on a neighbor on the brink of bankruptcy in the crisis over Crimea.

The increase, announced in Moscow by Russian natural gas producer Gazprom, means Ukraine will pay 80 percent more for its gas than before the initial increase on Monday.

Interim Ukrainian Prime Minister Arseniy Yatsenyuk said the latest move, two weeks after Moscow annexed Ukraine’s Crimea region, was unacceptable, and said that he expected Russia to increase pressure on Kiev.

“There is no reason why Russia would raise the gas price for Ukraine ... other than one — politics,” Yatsenyuk told reporters in an interview in the Ukrainian capital.

“We expect Russia to go further in terms of pressure on the gas front, including limiting gas supplies to Ukraine,” he said.

Moscow has frequently used energy as a political weapon against its neighbors, and European customers are concerned that Russia might again cut off deliveries in the current crisis.

“That kind of action taken coercively against Ukraine is something we oppose,” White House spokesman Jay Carney told reporters in Washington. “We believe that markets should determine energy prices.”

Gazprom management committee chairman Alexei Miller told Russian Prime Minister Dmitry Medvedev that the price increase was due to the introduction of an export duty on gas.

“The gas price is increasing automatically beginning in April,” Miller said.

The latest rise will be to US$485 per 1,000 cubic meters — two days after Gazprom, Russia’s top natural gas producer, announced a 44 percent increase to US$385.5 per 1,000 cubic meters from US$268.5 due to unpaid bills. This is much more than the average price paid by consumers in the EU.

Ukraine covers 50 percent of its gas needs with Russian supplies. It will soon get money from the IMF under a new loan package, but faces large debts and its economy is in chaos.

Sberbank CIB analyst Valery Nesterov said Ukraine could apply to an international court for a settlement.

Gazprom has had to agree to cut gas prices and improve contractual terms for its European clients, including those who challenged the firm in courts.

The EU receives around half of its Russian gas via Ukraine.

“It would be extremely difficult for Ukraine to pay such a price. I think this is just an instrument for further negotiations used by Gazprom,” Nesterov said.

Russia has moved to squeeze Ukraine’s faltering economy after protesters toppled pro-Moscow former Ukrainian president Viktor Yanukovych, installing new leaders committed to pursuing closer ties with the EU.

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