Ukraine and Russia resume talks in Brussels after they failed to reach an agreement on natural gas deliveries during negotiations held on Monday. Russian state gas company, Gazprom had demanded a debt payment, while Ukraine rejected the pricing mechanism, linked with export duty, proposed by Russia. Gas supplies to Europe, one third of which come from Russia, with almost a half of it pumped via Ukraine, are under threat as Moscow may cut deliveries to Kiev in case of breach of contract.
Our correspondent Daria Bondarchuk reports from the Russian capital.
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VO1. Despite the deadline for Ukraine to pay its 4,5 bln US dollar gas bill to Russia passing, negotiations between the representatives of Russia's Gazprom and Ukraine's Naftogaz, mediated by Europe's Energy Commissioner Guenther Oettinger continue. Russia claims Ukraine has to pay at least $1.45 billion US dollars before it can question the price, while Ukraine accuses Russia of unilaterally hiking the cost of natural gas by some 200 US dollars after the change of power in Kiev, calling the move political.
Kiev insists on returning to the initial price of 268.5 US dollars per 1,000 cubic meters. And says it will start paying off its debt only after a fair market-based price is negotiated. Europe previously said such a price could range between $350 and $380 US dollars.
VO2. Fyodor Lukyanov, the editor in chief of Russia in Global Affairs Magazine says the three parts have to arrive to a mutual comfortable decision.
SOT: Fyodor Lukyanov, the editor in chief of Russia in Global Affairs Magazine “It should be a coordinated solution between Russia, the European Union and the Ukrainian government otherwise everybody will lose because for Russia for example to have a new stoppage of gas deliveries to the European Union would mean a terrible loss of reputation, terrible damage of image as a reliable supplier”
VO3. Russia last month secured an alternative long-term client – China. The two countries struck a deal in May for Gazprom to supply its eastern neighbor with 38bln cubic meters of gas per year for the next three decades – a deal estimated to be worth 400bln US dollars. But that may hamper Gazprom's other projects in Asia, Russian analyst Mikhail Krutihin from RusEnergy consulting company says.
SOT: Mikhail Krutihin, analyst at RusEnergy consulting company – “Gazprom was planning to build this Vladivostok LNG factory to reach the Japanese market, the markets in Korea and Taiwan.” And unfortunately if Gazprom is planning to accelerate the access to the Chinese market by pipeline from Sakhalin, Khabarovsk to Vladivostok, the company will have to drop the idea of the Vladivostok LNG project.”
VO4. Despite Russia's attempts to demonstrate its energy superiority to Ukraine and Europe, experts say, the infrastructure it needs – the LNG facilities and the projected Altay pipeline that could allow Gazprom to easily switch gas flows from Europe to Asia and vice versa – is not yet in place. So it looks like Russia can't simply pull out of cooperation with Europe or drop Ukraine's gas transit services.
VO5. Gazprom earlier said its position has so far been flexible – it indicated it could reduce export duties and reconsider the gas price after Ukraine pays more of its debt. But Kiev rejected the price mechanism, suggested by Gazprom on Monday. So the possibility of gas supplies to Europe being halted is looming, as Gazprom's spokesman Sergei Kupriyanov said the compnay will not extend the payment deadline any further.