Gazprom hikes Ukraine gas price by a third

Kiev’s current debt to Russia stood at just over USD 1.7 bn, according to company’s chief executive Alexei Miller.

The Russian energy company, Gazprom has raised the price it charges Ukraine for gas by more than a third, BBC informs. The company’s chief executive Alexei Miller says the change was because Kiev has failed to pay its bills. He said its current debt to Russia stood at just over USD 1.7 bn (GBP 1.02 bn). Russia had previously offered Kiev a subsidy, but the recent political crisis in Ukraine has led to a deterioration in relations.
Miller says the price of Russian gas for Ukraine has gone up to USD 385.50 per 1,000 cubic metres in the second quarter of 2014 from the previous rate of USD 268.50. It will mean Ukraine paying more than the UK for gas, having previously paid less, according to calculations by ICIS, the energy price-reporting agency. Its research shows the from 1 April Ukraine will pay EUR 25.40 (GBP 21.04, USD 35.04) per megawatt hour for gas.
That compares to EUR 21.17 per megawatt hour in the UK and EUR 18.51 per megawatt hour that Ukraine previously paid. “It’s now cheaper for Ukraine to buy elsewhere,” ICIS European gas market analyst Tom Marzec-Manser said. What would stop state energy company Naftogaz doing so was the very limited pipeline capacity it had with the EU that could pipe gas eastward, he said. Smaller pipelines from Hungary and Poland served the country, but were not able to supply enough, enabling Russia to charge more than prices in the UK and the rest of Europe, he said. The move marks the end of a discount Russia agreed to give Ukraine in December. The deal came after talks between Russian President Vladimir Putin and Ukraine’s then President Viktor Yanukovych, in which Russia also said it would buy USD 15 bn-worth of Ukrainian government bonds. That agreement meant the cost of Russian gas supplied to Ukraine was slashed from more than USD 400 per 1,000 cubic metres.

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