You're reading: Putin: Gazprom to be forced to switch to pre-paid supplies amid Ukraine not paying for gas

Russia's Gazprom will not give Ukraine additional conditions on gas payments not stipulated in the 2009 contract, however Russia alone can not support Ukraine's economy by waiving debts, so Gazprom will forced to switch to pre-paid gas supplies amid the continuing non-payments by Ukraine.

This is stipulated in the letter Russian President Vladimir Putin has
sent to leaders of some European countries receiving Russian gas via
Ukrainian transit.

“Gazprom has no intentions except for those stipulated in the 2009
contract, nor does it plan to set any additional conditions. This also
concerns the contractual price for natural gas, which is calculated in
strict accordance with the agreed formula,” the letter said.

“However, Russia cannot and should not unilaterally bear the burden
of supporting Ukraine’s economy by way of providing discounts and
forgiving debts, and in fact, using these subsidies to cover Ukraine’s
deficit in its trade with the EU member states,” Putin said.

Amid continuing non-payments, “in accordance with Articles 5.15, 5.8
and 5.3 of the contract, Gazprom is compelled to switch over to advance
payment for gas deliveries, and in the event of further violation of the
conditions of payment, will completely or partially cease gas
deliveries,” the document said.

Russia considers this option as an extreme measure, Putin said. “We
fully realize that this increases the risk of siphoning off natural gas
passing through Ukraine’s territory and heading to European consumers.
We also realize that this may make it difficult for Ukraine to
accumulate sufficient gas reserves for use in the autumn and winter
period,” the president said.

In order to ensure uninterrupted gas transit, soon it will be
necessary to pump 11.5 billion cubic meters of gas into Ukraine’s
underground storage facilities, the letter said. “And this will require a
payment of about 5 billion US dollars,” Putin said.

In 2014 the debt of NAK Naftogaz Ukraine for gas delivered is growing
month after month, the letter said. In November-December 2013 the debt
amounted to $1.451 billion, in February 2014 it grew by $260.3 million
and in March by another $526.1 million.

“Here I would like to draw your attention to the fact that in March
there was still a discount price applied, i.e., 268.5 US dollars per
1,000 cubic meters of gas. And even at that price, Ukraine did not pay a
single dollar,” Putin said.

Putin’s letter has been sent to leaders of Moldova, Romania, Turkey,
Hungary, Slovakia, Slovenia, Macedonia, Czech Republic, Poland, France,
Germany, Croatia, Bosnia and Herzegovina, Greece, Serbia, Bulgaria,
Austria, and Italy.