Putin Says Further Violations by Ukraine Will Compel Russia to Cut Off Gas

RIA Novosti:

Russian energy giant Gazprom will be compelled to switch over to prepaid gas deliveries to Ukraine or completely cut off natural gas supplies, should the country further violate its terms of payment, Russian President Vladimir Putin wrote Thursday in an open letter to 18 European leaders.

“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,” Putin explained, saying this was undoubtedly an extreme measure.

Talk of a gas cutoff came as Ukraine again defaulted on its gas debt in March, swelling past the November record of $1.45 billion.

Putin explained that Gazprom’s decision to switch to upfront payments for gas stemmed from Ukraine’s inability to pay its debts, despite unprecedented price cuts that Kiev had been recently enjoying.

“I would like to draw your attention to the fact that in March there was still a discount price applied, that is [the price was] $268.50 per 1,000 cubic meters of gas. And even at that price, Ukraine did not pay a single dollar,” the president said.

Putin also pointed to a whole string of discounts that Ukraine had been granted over the years, slashing Ukraine’s gas bill by almost a third. But the country continued to violate its contract obligations, prompting Gazprom to rethink its delivery strategy, the Russian leader said.

“We fully realize that this [move] increases the risk of natural gas passing through Ukraine’s territory being siphoned off as it heads 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,” Putin wrote.

The president said that uninterrupted gas transit to Ukraine would require the country to pay Russia about $5 billion upfront in the near future, before the state-run energy company pumped 11.5 billion cubic meters of gas into Ukraine’s underground storage facilities.

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