Russia,the EC and the Ukraine

The gas negotiations of Russia, the Ukraine and the EU have ended with a temporary success. Gazprom managed to defend the basic parameters of the contract of 2009 and to ensure the receipt of money for gas, while Brussels largely removed the risk to the gas transit through the Ukraine in the winter. Kiev had to agree to buy Russian gas under the existing contract, but now on a prepayment basis, although the Ukraine hasn’t received firm guarantees from the EU on help to pay for gas.

On night of October 31st, Russia, the Ukraine and the EU managed to agree on a scheme whereby Kiev will have the opportunity to buy gas from Gazprom this winter. The temporary solution, which will be in force until the end of March 2015, suggests that Naftogaz Ukrainy will repay its debt in the amount of $3.1 billion to Gazprom and will be able to purchase gas on prepayment basis. The payment of the debt will be held in two tranches: the first one – in the amount of $1.45 billion – precedes the supply and, according to Kiev, will be transferred in the coming days. Then the Ukraine must make an advance payment for November - Gazprom promises to begin the gas supply during 48 hours after receiving the money. The second tranche – in the amount of $1.65 billion - should be transferred before the end of the year. Its payment is a condition for the supply of gas in 2015.