Russia Said to Mull Backdating Ukraine Gas Discount as Deal Lags

Russia is weighing a reduction in Ukraine’s natural-gas price retroactively once a new agreement is reached as talks threaten to miss an April 1 deadline, according to two people in Moscow, familiar with the matter.

Officials in Moscow may decide on the incentive after European Union-led gas talks in mid-April, the people said, asking not to be identified as the information isn’t public yet. The Economy Ministry is preparing a draft order on a discount that involves offsetting export duties, they said.

Energy talks between the former Soviet allies are mired in politics amid a deadly, yearlong conflict in eastern Ukraine between government troops and pro-Russian separatists. Ukraine plays a key role in the EU’s energy security as it carries more than 10 percent of the 28-member bloc’s gas needs through its pipelines from Russia. Russian gas cuts to Ukraine disrupted exports to the EU during disputes in 2006 and 2009 during high demand.

Ukraine will probably halt gas imports from Russia in April if an accord isn’t signed, Ukrainian Energy Minister Volodymyr Demchyshyn said Monday, according to RIA Novosti.

Russia’s state-controlled OAO Gazprom declined to comment, as did the Economy Ministry.

Russia temporarily decreased the gas price for Ukraine last year by as much as $100 per 1,000 cubic meters, or about 30 percent of the cost. The state cut Gazprom’s export duty to provide the discount after the EU brokered an interim deal between the countries to keep the gas flowing to Ukraine during the heating season.

The government in Moscow may agree on a similar discount, prolonging it quarterly before the international arbitration decides on Russia-Ukraine dispute over gas prices in their supply contract in place through 2019, Russian Energy Minister Alexander Novak said last week.

A new meeting on gas deliveries is preliminarily set for April 13-14 in Berlin, Demchyshyn said last week.

The talks haven’t been scheduled yet, the European Commission said by e-mail Thursday.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE