Financial News

  • 25 April 2014, 13:00

Gazprom Turns Up Heat On Kiev With $11bn Bill

Russia's energy giant Gazprom has hit Ukraine with a new $11.4bn (6.8bn) gas bill - more than five times its original claim.

Gas supply has become a key economic weapon used by Moscow against its near-neighbour amid EU claims it can divert supplies to Ukraine.

The EU has also said it could take supplies from the United States amid its fracking revolution but Russia sees this as an unviable alternative in the near-term.

The Ukrainian crisis is now in its fourth month, exacerbated by Russia's annexation of Crimea, which has led to the frostiest relations between East and West since the end of the Cold War more than two decades ago.

Reuters reported that a Gazprom source said the new 6.8bn bill was on top of $2.2bn (1.3bn) it said Ukraine's Naftogaz already owes for usage in last year and in 2014.

It is understood said the new bill, up more than 500% on top of the original, was sent to Naftogaz on Wednesday and based on a failure to meet a "take or pay" supply clause.

Russia's Interfax news agency said Gazprom deputy chief executive Alexander Medvedev revealed the additional bill while on a trip to Paris.

Gazprom and Naftogaz declined to comment on the claim.

"Take or pay" clauses in gas supply contracts tie users into commitments to pay irrespective of taking delivery or not.

Naftogaz was contracted to import 41.6 billion cubic metres (bcm) of gas in its contract last year but only took 12.9 bcm, according to the Gazprom source said.

Moscow has reacted angrily to a set of limited sanctions imposed upon it but rifts have appeared between the US, the EU and Britain.

London is a hub for Russian companies, investments and high-end property and France has lucrative defence contracts with Russia.

Germany is a key trading partner with Moscow and Austria has joined Berlin in a call for fewer sanctions over Crimea, in a bid to avoid further inflaming tensions.

Interfax reported on Wednesday that the Russian energy minister received a proposal from the EU energy commissioner for a meeting between the trading bloc, Ukraine and Moscow over the issue of gas.

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