Yanukovich: Kiev Refuses to Pay $7 Billion Fine to Russia’s Gazprom

February 25, 2013

According to a report by Prime, Kiev will not to pay a U.S. $7 billion fine to Russian natural gas giant Gazprom for failing to import the agreed amounts of gas in 2012, but negotiations will continue, Ukrainian President Viktor Yanukovich said Friday.

“We have declined to pay the fine sanctions, we are holding talks at the moment,” Yanukovich said.

In January, Gazprom sent Naftogaz Ukrainy a bill for gas that was contracted but not purchased.

Under a 2009 contract with Gazprom, signed by former Prime Minister Yulia Timoshenko, who is now in prison for concluding it, Kiev must pay a fine if it fails to buy the whole contracted volume of gas.

Ukraine, which is in the process of looking for alternative energy sources, consumed 24.9 billion cubic meters of Russian gas in 2012 compared to the contracted 52 billion cubic meters. The take or pay condition covers 41.6 billion cubic meters.

Yanukovich also said that Ukraine is unhappy with its cooperation with the European Energy Community as it remains indifferent to Ukraine’s complaints about the $7 billion bill and about the construction of the South Steam gas pipeline, designed to pump Russian gas to E.U. bypassing Ukraine.

“Ukraine’s interests are violated. Then there is a question: why do we need to be in this community?” Yanukovich said.

Ukrainian authorities want to revise the 2009 contract, saying that Russian gas prices are too high, but Moscow wants to receive the ownership of Ukrainian gas pipelines as condition for a revision.

“We are unlikely to sell the pipeline to anyone. We are likely to keep it in state ownership. Perhaps, on the terms we now see, the pipeline could be rented,” Yanukovich said.

The decision might be taken in the first half of 2013, he said.

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