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Russia cuts natural gas supply to Ukraine


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In December, Russia offered Yanukovych a discounted price of $268.50 per thousand cubic meters after he backed out of an economic and political agreement with the EU. But Russia annulled all price discounts after Yanukovych was chased from power in February following months of protests, raising the gas price to $485 per thousand cubic meters starting April 1.

Russia has offered a future price of $385, the price that Ukraine was paying until December, but Kiev has insisted on a lower price. Miller scoffed at that demand, saying it was significantly below European market prices.

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In Washington, U.S. State Department spokeswoman Jen Psaki said the EU was working with both sides to broker a "commercially competitive compromise that addresses a market price and payments."

"The EU, in our view, has put forward a fair and a reasonable compromise that Ukraine has accepted, and we urge Russia to re-engage on this basis," she told reporters.

Ukraine’s energy minister, Yuriy Prodan, said Ukraine was prepared for the Russian cutoff.

"We are providing reliable transit of gas and supplies to domestic consumers," he said.

In a related case, Gazprom announced Monday that it is suing Naftogaz in an international court for the $4.5 billion. Naftogaz said it has also filed a suit against Gazprom, seeking a "fair and market-based price" for gas, as well as a $6 billion repayment for what it said were overpayments for gas from 2010.

EU spokeswoman Sabine Berger said EU energy commissioner Guenther Oettinger remained committed to helping broker a deal between Kiev and Moscow.

One reason for EU involvement is the current state of Ukrainian gas reserves. Berger said they now stand at around 13.5 billion cubic meters but need to be at 18-20 billion cubic meters at the end of the summer for Europe to have enough gas this winter.

Ukrainian consumers, however, will be facing higher prices no matter what Russia does. Previous governments had sold gas to consumers at about a fifth of what Naftogaz pays for it — leaving little incentive to conserve and saddling the government with huge deficits.


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Ukraine’s new government is in the process of raising domestic gas prices, a condition of its $17 billion bailout loan from the International Monetary Fund.

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McHugh reported from Kiev, Ukraine. Vladimir Isachenkov in Moscow, Matthew Lee in Washington and John-Thor Dahlburg in Brussels contributed to this report.



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