Putin gets serious on gas supplies to Novorossia

We reported on this yesterday. Putin gets serious and western media just shrugs it off by not mentioning it.

Putin Slams Ukraine Decision To Cut-Off Gas To East As "Genocidal"

Zero Hedge,

24 February, 2015

Ukrainian authorities decision to halt gas supplies to Donetsk amid the ongoing humanitarian catastrophe occurring there "bear the hallmarks of genocide," blasted Russia's Vladimir Putin during an awkward press conference with Cyprus' President Nicos Anastasiades (who he had just agreed bilateral military and trade deals with). "Apparently, some responsible leaders of the modern-day Ukraine are unable to understand the importance of humanitarian issues," Sputnik News reports Putin concluded. In an attempt to gain leverage and force Ukraine's hand however, Russia's Gazprom has indicated it intends to suspend gas deliveries to Ukraine (and thus Europe via pipelines) unless Kiev makes a further prepayment.

Amid the cease-less-fire, Vladimir Putin is displeased...

Russian President Vladimir Putin said Wednesday the decision of the Ukrainian authorities to halt gas supplies to Donetsk amid the ongoing humanitarian catastrophe “bear hallmarks of genocide”.

“As if hunger [in Donetsk and Luhansk] was not enough – the OSCE has already stated that the region is experiencing a humanitarian catastrophe –  they had their gas supplies cut off. What would you call it? I would say this bears the hallmarks of genocide,” he said during a meeting with President of Cyprus Nicos Anastasiades.

"Apparently, some responsible leaders of the modern-day Ukraine are unable to understand the importance of humanitarian issues. It seems that the very notion of humanism has been forgotten," he added.

And, in apparently unconnected news, Russia intends to suspend gas deliveries to Ukraine unless Kiev makes a further prepayment as its current balance only covers three or four days' gas supply, Russian President Vladimir Putin said Wednesday...

"Prepayments, made by Ukrainian side, are enough for three - four days. If [further] payment is not made, Gazprom, in compliance with this contract, will halt the [gas] supplies," Putin said at a press conference.

"Naturally, it may create a certain threat for the transit to Europe," Putin added.

Ukraine's state energy company Naftogaz on Monday accused Russia's Gazprom of failing to deliver the gas for which Kiev had prepaid.

According to a statement by the company's press service, Gazprom was to deliver 114 cubic meters both on February 22 and February 23 but supplied only 47 and 39 million cubic meters on these dates instead, respectively.

On Tuesday, Gazprom head Alexei Miller, in turn, said that the amount of gas prepaid by Ukraine was estimated at 219 million cubic meters, enough for a couple of days only.

Kiev's massive gas debt, exceeding $5 billion at the time, forced Moscow to suspend gas deliveries to Ukraine for nearly six months in 2014. Deliveries resumed in early December under the so-called winter package deal, mediated by the European Union and signed by Gazprom and Naftogaz. The deal stipulated that Ukraine must pay Russia in advance for all future gas supplies.

*  *  *

So, in summary, as UAH crashes into hyperinflation, the IMF (and US taxpayers') funds will be merely a direct funds transfer from the West to Russia (for gas supply services rendered) and Putin take the 'eye for an eye' analogy one step further - cut off supply to Donetsk and we cut off supply to everyone...

Putin: Gas supplies to Europe could suffer in 3-4 days if Kiev doesn't pay

Russia will cut off gas supplies to Ukraine if Kiev fails to pay in “three or four days,” President Vladimir Putin said, adding that this "will create a problem" for gas transit to Europe.

RT

25 February, 2015

“Gazprom has been fully complying with its obligations under the Ukraine gas supply contract and will continue doing that,” Putin told reporters after talks with the president of Cyprus on Wednesday. “The advance payment for gas supply made by the Ukrainian side will be in place for another three to four days. If there is no further prepayment, Gazprom will suspend supplies under the contract and its supplement. Of course, this could create a certain problem for [gas] transit to Europe to our European partners.”

However, Putin expressed the hope that it would not come to that, stressing that “it depends on the financial discipline of our Ukrainian partners.”

He noted that Russia’s ministers and the CEO of Gazprom have “actively” reminded Ukraine of the looming deadline.

On Tuesday, Gazprom's CEO Aleksey Miller reminded Ukraine’s state-owned Naftogaz of the gas prepayment. Miller said that Ukraine had not paid for March deliveries and warned that Kiev was risking an early termination of the advance settlement and a supply cutoff.

"It takes about two days to get payment from Naftogaz deposited to a Gazprom account. That's why a delivery to Ukraine of 114 million cubic meters will lead to a complete termination of Russian gas supplies as early as in two days, which creates serious risks for the transit to Europe,” Miller said.

Putin said that Gazprom had breached no contract terms of gas supplies to border points to eastern parts of Ukraine.

"It has become known to us that Kiev suspended gas supplies [to Lugansk and Donetsk regions] referring to the alleged damage to gas pipelines," Putin said.

"At the same time, Gazprom is fulfilling the contract signed back in 2009 and an addendum to it made in October last year. In full compliance with this contract, it supplies gas to Ukraine under advance payments made for the volumes, which Ukraine needs."

Putin indicated that these contracts also stipulated border points. "Gazprom is not breaching any provisions," he added.

"As for the damage to the gas pipeline, I don't know for certain, but I know that these regions are home to about 4.5 million people. Just imagine that these people may be left without gas supply during the winter period. In addition to the hunger, there as is already stated by the OSCE and the humanitarian disaster, just imagine these people may also be left without gas supply," Putin said.

He accused some Ukrainian officials of failing to understand the humanitarian issues in Ukraine’s eastern regions.

Citing the OSCE report of a “humanitarian catastrophe” in southeastern Ukraine as well as famine, President Putin said Kiev’s recent decision to switch off gas for those regions “smells like genocide.”

Ukraine’s state-owned Naftogaz suspended gas supplies to eastern regions on February 19, citing damage to a pipeline. Under the gas deal between Moscow and Kiev, Gazprom promptly launched gas supplies to Ukraine’s southeast through border gas metering stations supplying 12 million cubic meters a day.

Kiev said it restored the damage in several hours and restarted gas supplies. Naztogas has refused to pay Gazprom for the gas supplied to eastern regions from February 19. The same day, Russian Prime Minister Dmitry Medvedev ordered the country’s energy minister and the head of Gazprom to prepare proposals on fuel deliveries to Ukraine’s southeast regions.

Naftogaz has also accused Russia of breaking the agreement to deliver 114 million of cubic meters of natural gas to Ukraine by delivering only 47 million cubic meters.

According to Naftogas, since February 22 Gazprom has been fulfilling only 40 percent of its requests for pre-paid gas, yet the Ukrainian company plans to get 206 million cubic meters of pre-paid gas by the end of February, RIA-Novosti reported Wednesday.

Reuters reports - 

Putin warns gas supplies to Ukraine, Europe could be disrupted

Russia may cut off Ukrainian gas

I expected that this would be headlines this morning, but....

Russian gas transit to Europe at stake, if no Ukraine payment received within 2 days

RT,

23 February, 2015

Russia will completely cut Ukraine off gas supplies in two days if Kiev fails to pay for deliveries, which will create transit risks for Europe, Gazprom has said.

Ukraine has not paid for March deliveries and is extracting all it can from the current paid supply, seriously risking an early termination of the advance settlement and a supply cutoff, Gazprom's CEO Alexey Miller told journalists. The prepaid gas volumes now stand at 219 million cubic meters.

"It takes about two days to get payment from Naftogaz deposited to a Gazprom account. That's why a delivery to Ukraine of 114 million cubic meters will lead to a complete termination of Russian gas supplies as early as in two days, which creates serious risks for the transit to Europe,” Miller said.

Earlier this month, Russian Energy Minister Aleksandr Novak estimated Ukraine's debt to Russian energy giant Gazprom at $2.3 billion.

In the end of 2014, Kiev's massive gas debt that stood above $5 billion, forced Moscow to suspend gas deliveries to Ukraine for nearly six months. On December 9, Russia resumed its supplies under the so-called winter package deal, which expires on April 1, 2015.

Naftogaz refusal

Naftogaz said it would not make advance payments for Russian gas without knowing Gazprom will implement its side of the contract, and the EU - brokered 'winter plan.'

“Europe currently is the main source of gas supplied to Ukraine, that’s why the flawless implementation of our liabilities to transport gas to the EU is our major strategy,” the head of Naftogaz, Andrey Kobolev said.

On Monday, Ukrainian state energy company Naftogaz accused Gazprom of failing to deliver gas that Kiev had paid for in advance. Naftogaz says Russia has broken an agreement to deliver 114 million of cubic meters of natural gas to Ukraine by delivering only 47 million cubic meters.

During a meeting with President Vladimir Putin on February 20, Russian Prime Minister Dmitry Medvedev expressed concern about an increase in daily applications by Ukraine for the supply of gas, TASS reports.

He noted that "Ukraine's consumers have requested a larger supply; the volume has increased by 2.5 times. This means that the prepaid volumes left are enough for no more than two to three days.”

Last week, Medvedev ordered the energy minister and the head of Gazprom to prepare proposals on fuel deliveries to the self-proclaimed Republics of Donetsk and Lugansk (DPR and LPR) after Kiev had cut off the delivery pipeline into the southeastern regions. Ukraine's Naftogaz said it had halted gas supplies to eastern regions due to broken pipelines.

Prime Minister Arseny Yatsenyuk said earlier that Ukraine was looking forward to increasing its domestic oil and gas exploration and more supplies from Europe allowing it to completely cut imports of Russian gas.

:

PM Medvedev orders commencement of gas deliveries to embattled Donbass

BREAKING: Russia cuts off Ukraine gas supply

It looks as if Russia has finally decided to do what it should have one MONTHS AGO.

Now Russia will be looking to supply gas through Turkey and completely by-pass Ukraine. 

Europe can take it or lump it. 

Nothing yet on this from RT or Sputnik.

Europe plunged into energy crisis as Russia cuts off gas supply via Ukraine

• Gas prices rise in London
• Bulgaria reaches 'crisis' point

Daily Mail,

14 January, 2015

Russia cut gas exports to Europe by 60 per cent today, plunging the continent into an energy crisis 'within hours' as a dispute with Ukraine escalated. 

This morning, gas companies in Ukraine said that Russia had completely cut off their supply.

Six countries reported a complete shut-off of Russian gas shipped via Ukraine today, in a sharp escalation of a struggle over energy that threatens Europe as winter sets in.

Bulgaria, Greece, Macedonia, Romania, Croatia and Turkey all reported a halt in gas shipments from Russia through Ukraine. 

Croatia said it was temporarily reducing supplies to industrial customers while Bulgaria said it had enough gas for only 'for a few days' and was in a 'crisis situation'.

Russian Prime Minister Vladimir Putin, left, speaks to Gazprom chairman Alexei Miller during a meeting yesterday

The European Union in Brussels called the sudden cut-off to some of its member countries 'completely unacceptable'.

The EU demanded the two sides reopen talks as the row immediately sparked fears of gas supply shortages and rising energy prices in the UK.

The UK is suffering one of its coldest nights this century with temperatures plunging to as low as -10C.

Though Britain is one of Gazprom's largest importers - relying on the company for some 16 per cent of consumption in 2007, according to The Times, the gas is supplied through a complicated swap scheme that means supplies themselves may not be affected.

Prices, on the other hand, rose during trading in London today.

Dmitry Medvedev and Vladimir Putin on the slopes last week. Putin ordered Gazprom to cut supplies to and through Ukraine by around three-fifths

The dispute, coupled with Israel's military operation in Gaza, also pushed oil up to a three-week high of $49.91 in New York yesterday.

Russia, whose main export is oil, stands to benefit from a recovery in prices.

'Without prior warning and in clear contradiction with the reassurances given by the highest Russian and Ukrainian authorities to the European Union, gas supplies to some EU member states have been substantially cut,' the EU said in a statement.

'The Czech EU Presidency and the European Commission demand that gas supplies be restored immediately to the EU and that the two parties resume negotiations at once with a view to a definitive settlement of their bilateral commercial dispute,' the presidency and the Commission said in a joint statement.

They added that the EU would 'intensify the dialogue with both parties so that they can reach an agreement swiftly'.

Overnight the Russian Prime Minister Vladimir Putin ordered the state energy giant Gazprom to cut supplies to and through Ukraine by around three-fifths amid accusations its neighbour has been siphoning off and stealing Russian gas.

Ukraine says the Russian move has been prompted by payment and price disputes, a row between the two that has become almost annual.

The effects of the dispute on the rest of Europe however is stark, said Ukraine's main gas supplier.

Around 80 per cent of the gas European Union countries receive from Russia comes through Ukraine.

While Germany and France are much more exposed, it is reckoned in some estimates that 15 per cent of Britain's supplies come from Russia through pipelines into the UK's east coast.

'They [the Russians] have reduced deliveries to 92million cubic metres per 24 hours compared to the promised 221million cubic metres without explanation,' said Valentin Zemlyansky of the Ukrainian gas company Naftogaz.

'We do not understand how we will deliver gas to Europe. This means that in a few hours problems with supplies to Europe will begin.'

Wholesale gas prices have already risen on the back of the rallying price of oil, up 50 per cent in the last fortnight to more than $48 a barrel on the back of Middle East tension over Israeli incursions into Palestinian-held Gaza.

The dispute stokes fears Britain is overreliant on imported gas. North Sea stocks are dwindling, though initiatives are in place to build the Langeled pipeline from Norway, improve underground long-term storage facilities and receive liquefied natural gas by ship from Africa and Asia.

Eastern and central European countries are already reporting supply problems, including the Czech Republic which has the current presidency of the EU. The EU as a whole depends on Russia for 25 per cent of its gas supplies.

From Zero Hedge

Russia Cuts Off Ukraine Gas Supply To 6 European Countries

Zero Hedge,

14 January, 2015

Vladimir Putin ordered the Russian state energy giant Gazprom to cut supplies to and through Ukraine amid accusations, according to The Daily Mail, that its neighbor has been siphoning off and stealing Russian gas. Due to these"transit risks for European consumers in the territory of Ukraine," Gazprom cut gas exports to Europe by 60%, plunging the continent into an energy crisis "within hours." Perhaps explaining the explosion higher in NatGas prices (and oil) today, gas companies in Ukraine confirmed that Russia had cut off supply; and six countries reported a complete shut-off of Russian gas. The EU raged that the sudden cut-off to some of its member countries was "completely unacceptable," but Gazprom CEO Alexey Miller later added that Russia plans to shift all its natural gas flows crossing Ukraine to a route via Turkey; and Russian Energy Minister Alexander Novak stated unequivocally, "the decision has been made."

As Bloomberg reports,

Russia plans to shift all its natural gas flows crossing Ukraine to a route via Turkey, a surprise move that the European Union’s energy chief said would hurt its reputation as a supplier.

The decision makes no economic sense, Maros Sefcovic, the European Commission’s vice president for energy union, told reporters today after talks with Russian government officials and the head of gas exporter, OAO Gazprom, in Moscow.

Gazprom, the world’s biggest natural gas supplier, plans to send 63 billion cubic meters through a proposed link under the Black Sea to Turkey, fully replacing shipments via Ukraine, Chief Executive Officer Alexey Miller said during the discussions. About 40 percent of Russia’s gas exports to Europe and Turkey travel through Ukraine’s Soviet-era network.

...

Sefcovic said he was “very surprised” by Miller’s comment, adding that relying on a Turkish route, without Ukraine, won’t fit with the EU’s gas system.

 

Gazprom plans to deliver the fuel to Turkey’s border with Greece and “it’s up to the EU to decide what to do” with it further, according to Sefcovic.

Which, as The Daily Mail reports, has led to a major (and imminent) problem for Europe...

Russia cut gas exports to Europe by 60 per cent today, plunging the continent into an energy crisis 'within hours' as a dispute with Ukraine escalated.

 

This morning, gas companies in Ukraine said that Russia had completely cut off their supply.

 

Six countries reported a complete shut-off of Russian gas shipped via Ukraine today, in a sharp escalation of a struggle over energy that threatens Europe as winter sets in.

 

Bulgaria, Greece, Macedonia, Romania, Croatia and Turkey all reported a halt in gas shipments from Russia through Ukraine.

*  *  *

As Bloomberg goes on to note, Gazprom has reduced deliveries via Ukraine after price and debt disputes with the neighboring country that twice in the past decade disrupted supplies to the EU during freezing weather.

“Transit risks for European consumers on the territory of Ukraine remain,” Miller said in an e-mailed statement. “There are no other options” except for the planned Turkish Stream link, he said.

 

“We have informed our European partners, and now it is up to them to put in place the necessary infrastructure starting from the Turkish-Greek border,” Miller said.

 

Russia won’t hurt its image with a shift to Turkey because it has always been a reliable gas supplier and never violated its obligations, Russian Energy Minister Alexander Novak told reporters today in Moscow after meeting Sefcovic.

 

“The decision has been made,” Novak said. “We are diversifying and eliminating the risks of unreliable countries that caused problems in past years, including for European consumers.”

*  *  *

That helps to explain today's epic meltup in NatGas futures...

*  *  *

"They [the Russians] have reduced deliveries to 92million cubic metres per 24 hours compared to the promised 221million cubic metres without explanation," said Valentin Zemlyansky of the Ukrainian gas company Naftogaz.

"We do not understand how we will deliver gas to Europe. This means that in a few hours problems with supplies to Europe will begin."

*  *  *

Check to you Europe (i.e. Washington)... Because it's getting might cold in Europe...

(and bear in mind the consequences of cold, pissed off Europeans in the past).

Dumping the dollar

The Nail In The Petrodollar Coffin: Gazprom Begins Accepting Payment For Oil In Ruble, Yuan

Zero Hedge,

28 August, 2014

Several months ago, when Russia announced the much anticipated "Holy Grail" energy deal with China, some were disappointed that despite this symbolic agreement meant to break the petrodollar's stranglehold on the rest of the world, neither Russia nor China announced payment terms to be in anything but dollars. In doing so they admitted that while both nations are eager to move away from a US Dollar reserve currency, neither is yet able to provide an alternative.

This changed in late June when first Gazprom's CFO announced the gas giant was ready to settle China contracts in Yuan or Rubles, and at the same time the People's Bank of China announced that its Assistant Governor Jin Qi and Russian central bank Deputy Chairman Dmitry Skobelkin held a meeting in which they discussed cooperating on project and trade financing using local currencies. The meeting discussed cooperation in bank card, insurance and financial supervision sectors.

And yet, while both sides declared their operational readiness and eagerness to bypass the dollar entirely, such plans remained purely in the arena of monetary foreplay and the long awaited first shot across the Petrodollar bow was absent.

Until now.

According to Russia's RIA Novosti, citing business daily Kommersant, Gazprom Neft has agreed to export 80,000 tons of oil from Novoportovskoye field in the Arctic; it will accept payment in rubles, and will also deliver oil via the Eastern Siberia-Pacific Ocean pipeline (ESPO), accepting payment in Chinese yuan for the transfers. Meaning Russia will export energy to either Europe or China, and receive payment in either Rubles or Yuan, in effect making the two currencies equivalent as far as the Eurasian axis is conerned, but most importantly, transact completely away from the US dollar thus, finally putin'(sic) in action the move for a Petrodollar-free world.

More on this long awaited first nail in the petrodollar coffin from RIA:

The Russian government and several of the country’s largest exporters have widely discussed the possibility of accepting payments in rubles for oil exports. Last week, Russia began to ship oil from the Novoportovskoye field to Europe by sea. Two oil tankers are expected to arrive in Europe in September.

According to Kommersant, the payment for these shipments will be received in rubles.

Gazprom Neft will not only accept payments in rubles; subsequent transfers via the ESPO may be paid for in yuan, the newspaper reported.

According to the newspaper, the change in currency was made because of the Western sanctions against Russia.

As a protective measure, Russia decided to avoid making its payments in US dollars, which can be tracked and controlled by the United States government, Kommersant reported.

"Protective measure" meaning that it was the US which managed to Plaxico itself by pushing Russia to transact away from the US Dollar, in the process showing the world it can be done, and slamming the first nail in the petrodollar's coffin.

This is not surprising to anyone who has been following our forecast of the next steps in the transition from the Petrodollar to the Gas-O-Yuan. Recall from April:

The New New Normal flow of funds:

1. Gazprom delivering gas to China.

2. China Gazprom paying in Yuan (convertible into Rubles)

3  Gazprom funding itself increasingly in Yuan.

Russia buying Chinese goods and services in Yuan (convertible into Rubles)

And all of this with the US banker cartel completely disintermediated courtesy of the glaring absence of the USD in any of the above listed steps, or as some may call it: from the Petrodollar to the Gas-o-yuan (something 40 central banks have already figured out... just not the Fed).

Still confused? Then read "90% Of Gazprom Clients Have "De-Dollarized", Will Transact In Euro & Renminbi" for just how Gazprom set the stage for the day it finally would push the button to skip the dollar entirely. Which it just did.

In conclusion we will merely say what we have said previously, and it touches on what will be the most remarkable aspect of Obama's legacy, because while the hypocrite "progressive" president who even his own people have accused of being a "brown-faced Clinton" after selling out to Wall Street and totally  wrecking US foreign policy abroad, is already the worst president in a century of US history according to public polls, the fitting epitaph will come when the president's policies put an end to dollar hegemony and end the reserve currency status of the dollar once and for all, thereby starting the rapid, and uncontrolled, collapse of the US empir

To wit:

In retrospect it will be very fitting that the crowning legacy of Obama's disastrous reign, both domestically and certainly internationally, will be to force the world's key ascendent superpowers (we certainly don't envision broke, insolvent Europe among them) to drop the Petrodollar and end the reserve status of the US currency.

As of this moment, both Russia and China have shown not on that it can be done, but it is done. Expect everyone to jump onboard the new superpower axis bandwagon soon enough.

Ukraine on gas prepayment plan

Gazprom puts Ukraine on gas prepayment plan after ‘chronic’ failure to pay debt

RT,

16 June, 2014

After failing to pay its gas bill, Ukraine now has to pay in advance for any natural gas from Russia, Gazprom said on Monday. Both companies have filed lawsuits against each other at the Stockholm Arbitration Court

“This decision was taken due to systematic failure of Naftogaz Ukraine to pay. The debt of the company for Russian gas stands at $4.458 billion, including $1.451 billion for November and December 2013, and $3.007 billion for April-May 2014,” Gazprom said in a statement posted on their website.

Gazprom @GazpromNewsEN

Читать

Today #Gazprom switched Naftogaz of Ukraine to a gas prepayment scheme starting from 10:00 am in full compliance with the existing contract

6:24 после полудня - 16 июня 2014

162 RETWEETS

“They’ve paid zero. Correspondingly we deliver zero,” Sergey Kupriyanov, a Gazprom spokesperson said in a press conference following the announcement.

Reuters reports that gas supplies to Ukraine were restricted off as soon as the deadline at 10:00am in Moscow passed.

Both companies have announced they are opening lawsuits with the Stockholm Chamber of Commerce Arbitration.

PaulaSlier_RT @PaulaSlier_RT

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#Naftogaz takes #Gazprom to Stockholm court to demand gas contract revision.Kiev wants to claim $6bln of overpayment from the Russ. company.

10:17 после полудня - 16 июня 2014

Naftogaz, Ukraine’s oil and gas utility, is seeking a $6 billion sum for 'unfair' gas prices and asking the court to review prices that were agreed on in 2010 under then Prime Minister Yulia Tymoshenko.

Gazprom announced wants to recover the $4.5 billion worth of debt and also seek compensation for Ukraine's failure to import the agreed upon amount of natural gas under their "take or pay" contract with Gazprom over the past two years. The penalty in accordance with the contract could be around $18 billion.

Gunther Oettinger, who has been the main broker between the three-way talks between Russia, Ukraine, and the EU, has urged Russia to ‘reconsider’ its decision to place Ukraine on a prepayment gas plan.

"Further invitations for trilateral talks in June are foreseen," EU energy minister Gunther Oettinger said at a news conference in Vienna.

Oettinger has been the main broker of the three-way talks between Russia, Ukraine, and the EU, all of which have ended in deadlock.

Yury Prodan, Ukraine's energy minister, has stressed that taking the case to Stockholm is the only way to settle the matter.

Kiev was also late in payments in the winters of 2006 and 2009. Both periods lasted about three weeks, during which Kiev attempted to siphon off supplies for themselves, which left millions of European homes without heat.

“Volumes of gas for European customers will be fully met in compliance with their contracts. Naftogaz must ensure transportation to the delivery points," Kupriyanov said.

Further actions will be taken after Gazprom head meets with Russian President Vladimir Putin today, Deputy Prime Minister Arkady Dvorkovich told reporters at the World Petroleum Congress, being held in Moscow June 15-19.

Russia’s energy minister Aleksander Novak and Gazprom head Aleksey Miller will hold a press conference later this afternoon.

Ukraine has accumulated a multi-billion dollar debt for natural gas supplied by Russia and is unwilling to pay. It calls the 10-year gas contract that former Prime Minister Yulia Tymoshenko signed with Russia back in 2009 unacceptable and demands that Russia lower the price

The sudden halt shot up natural gas prices in Europe, a trend many analysts will repeat itself this time around.

Moscow was willing to offer a discount and even recalculate the debt Ukraine has accumulated since April to account for it, but Kiev rejected the offer, saying it was not good enough. Gazprom considers Ukraine’s position a form of blackmail.

After negotiations on Sunday, Gazprom announced that their final pricing offer was $385 per 1,000 cubic meters of natural gas, which Ukraine still rejected.

Price disputes between the two neighbors intensified after a government coup followed by violence in Ukraine, when the price of gas exports from Moscow to Kiev shot up from $268.50 to $485.00.

Europe imports a third of its natural gas from Russia, and nearly half of that is delivered via Ukraine. In 2012, over 84 billion cubic meters of gas traveled from Russia to Europe through Ukraine.

Under the current contract, Ukraine is required to import 40 billion cubic meters of gas. Ukraine’s energy minister said on Friday that Ukraine has more than 15 billion cubic meters of Russian gas in storage.

Kiev pumps astronomical 

volumes of gas into 

underground storage 

without paying - Gazprom 

CEO

Voice of Russia,

16 June, 2014

During the time that Ukraine has not paid for Russian gas, it has pumped astronomical volumes into its underground gas storage facilities, Gazprom’s CEO Alexey Miller said on Monday. Out of 12.5 billion cubic meters of gas in underground storage, 11.5 billion cubic meters is Russian gas that Ukraine has not paid for, Miller added. He said the storage facilities need more than 18 billion cubic meters to be prepared for winter

Gazprom has an agreement with the European Commission that, if shipments of gas through Ukraine are interrupted, then the issue of the OPAL pipeline capacity will be resolved, Gazprom CEO Alexei Miller said at a press conference at Interfax's central office.

The commission has imposed a ban on Gazprom's use of 50% capacity at the eastern branch where the Nord Stream pipeline meets OPAL.

The conditions proposed to Kiev during gas talks were better than those in place under former Ukrainian president Viktor Yanukovych, Gazprom CEO Alexei Miller said at a meeting with Russian Prime Minister Dmitry Medvedev.

Firstly, the Russian side was ready to guarantee that the discount of $100 per 1,000 cubic meters would not change and ultimately proposed "guaranteeing no change in the discount until the current contract expires, that is, until the end of 2019," Miller said.

Secondly, "we virtually proposed to our Ukrainian colleagues suspending the take-or-pay provision for 2014," he said.

"The situation in the Ukrainian economy is indeed grave and we understand that Naftogaz will find it difficult, if not impossible, to commit to taking the minimum annual contracted amount.

At the beginning we reduced this to 34 billion cubic meters, then 27 billion, and finally we offered to allow Ukraine to take whatever amount in 2014 it felt comfortable with, at $385 per 1,000 cubic meters," Miller said.

"Of course, such gas supply provisions were not available during Yanukovych's tenure," he said.

"In other words, they were offered ultra-discount terms, even compared to the gas cooperation terms that existed under the previous president. Nonetheless, they refused to accept those terms and, in effect, artificially created a gas crisis," Medvedev said.

Gazprom imposes advance payment requirement for gas deliveries to Ukraine, files $4.5 bln lawsuit in Stockholm arbitration

Gazprom has switched to requiring advance payment from Ukraine's Naftogaz on deliveries of natural gas in accordance with the contract between them and effective from 10:00 am local time, the Russian gas giant said. Gazprom has filed a lawsuit in Stockholm arbitration seeking to collect $4.5 billion in debt for gas from Ukraine's Naftogaz, the Russian gas giant said.

"The decision was made due to Naftogaz Ukrainy's chronic nonpayment. Its overdue indebtedness for Russian gas totals $4.458 billion: $1.451 billion for November-December 2013 and $3.007 billion for April-May 2014," the statement says.

Gazprom files $4.5 bln lawsuit against Naftogaz in Stockholm arbitration over debt for gas

Gazprom has filed a lawsuit in Stockholm arbitration seeking to collect $4.5 billion in debt for gas from Ukraine's Naftogaz, the Russian gas giant said. Gazprom has emphasized that Ukraine's Naftogaz remains contractually obligated to ensure uninterrupted transit of Russian gas bound for consumers in Europe, Gazprom said in a statement.

Gazprom expects Ukraine’s Naftogaz to meticulously uphold its contractual obligations to provide gas transit to third countries, it said.

Read also: European Union transfers €250 mln financial aid to Ukraine

"In addition, the European Commission has received timely notification of possible interruptions in gas transit, in the event that Naftogaz Ukrainy siphons off gas from transit flows," the statement says.

"Gazprom has already exerted and will continue to exert every possible effort aimed at preventing any potential interruption in gas transit for European consumers," Gazprom said.

Moscow to switch to gas prepayment system if Ukraine fails to pay $1.95 billion by 6 am GMT

Russia's energy producer Gazprom is preparing to switch its natural gas deliveries to Ukraine to a prepayment system, which effectively means cutting-off gas supplies if Kiev fails to pay $1.95 billion by 10 am Moscow time (6 am GMT). 

The latest round of crunch talks ended without an agreement late on Sunday night, with Gazprom reaffirming its unyielding position, according to the gas firm's spokesman Sergei Kupriyanov.

"The Russian side expects a debt payment of $1.951 billion by 10 am [6 am GMT] on June 16. If this sum isn't paid by then, gas deliveries to Ukraine will be switched to a prepayment scheme, as it was announced earlier," the Gazprom spokesperson warned in the wake of the negotiations.

The talks were attended by Gazprom CEO Alexei Miller, Ukraine's acting Prime Minister Arseniy Yatsenyuk and EU Energy Commissioner Guenther Oettinger. Oettinger remained optimistic about the outcome of the meeting, despite Kupriyanov telling AFP the chance for another Gazprom-Naftogaz get-together before the Monday deadline was rather slim.

Russia, Ukraine fail to find compromise at gas talks

Russia and Ukraine failed to resolve a gas pricing dispute at talks for Ukraine to settle $1.95 billion of gas debts, a spokesman for Russian natural gas producer Gazprom said on Monday.

Spokesman Sergei Kupriyanov said after talks in Kiev that Russia would switch to an advance payment system if it did not receive the money, meaning Moscow could cut off gas supplies to Ukraine.

Cutting supplies could disrupt the gas flow to the European Union, reports Reuters.

"The talks in Kiev finished around 2:30 am Moscow time (22:30 GMT on Sunday). The Russian side is expecting payment of the accumulated gas debt of $1.951 billion before 10 am (06:00 GMT) on June 16," Kupriyanov said.

Russia and Ukraine disagree how much Kiev should pay for the natural gas it receives from Russia.

European Energy Commissioner Günther Oettinger told reporters in Kiev that he had made a compromise proposal during talks which began late on Sunday but Moscow had declined the offer.

Prospects of a breakthrough had dimmed because of political tensions and clashes between government forces and pro-Russian separatists in east Ukraine.

Busted: 4 Russia/Ukraine gas-spat myths

The CNN version of events

Russia cuts off natural gas supplies to Ukraine

Russian state-owned gas firm Gazprom says it has cut off supplies to Ukraine after negotiators failed to resolve a payment dispute before a key deadline expired.

CNN Money,

16 June, 2014

Representatives from Ukraine, Russia and the European Union held meetings over the weekend in an effort to avert the crisis, but no agreement was reached.

Gazprom said Monday that Ukraine's total debt is $4.5 billion. The state-owned gas firm will now only deliver gas that Ukraine has paid for in advance.

"At this moment no payments for old debt or June were paid," said Gazprom spokesman Sergey Kupriyanov. "All charts show zeroes."

Both sides said they have filed claims with an international arbitration court in Stockholm.

While Gazprom hiked the price it charges Ukraine by about 80% to $485.50 per thousand cubic meters of gas in April, some concessions have been offered during recent talks. Gazprom charged European countries an average of $377.50 per thousand cubic meters in 2013.

The gas dispute between Moscow and Kiev has escalated as relations between the two countries have deteriorated.

Rising gas prices hurting Ukrainians

Europe and the U.S. have imposed sanctions on Russia for its annexation of Crimea, while analysts have accused Russia of using natural gas supplies as a political tool.

In recent weeks, violence has again flared in eastern Ukraine as government forces clashed with pro-Russian militants. The military conflict was clearly having an effect on gas negotiations.

"We will not subsidize Russian Gazprom (sic)," Ukrainian Prime Minister Arseniy Yatsenyuk said Monday. "Ukrainians will not take out of their pockets $5 billion annually for Russia to use this money to buy weapons, tanks and jets and bomb Ukrainian territories."

Europe relies on Russia for more than 30% of its gas, and half of that is pumped through Ukraine. Analysts worry that a disruption in supplies to Ukraine could hurt European companies and households.

Kupriyanov said Monday that "gas designated for European consumers is flowing in full accordance with the contract's figures."