Ukraine: Gas supplies to resume from Russia

After a pre-payment of $378 million to Gazprom, gas will flow into Ukraine once again after Russia cut all gas deliveries to Ukraine in June over a pricing and debt dispute. Relations on this issue were overshadowed by the civil war that broke out, and Kiev, short on money as it is, had to borrow a significant amount (almost $18 billion) from the International Monetary Fund, to not only keep its military in operation but also to keep the state gas company, Naftogaz, solvent.

After Naftogaz and Gazprom agreed to a debt repayment schedule in October and payments (painfully) proceeded, Gazprom made preparations to turn the gas back on upon receipt of the pre-payment, good for the first 1 billion cubic meters. Ukraine is one of the largest customers of Russian gas, with annual imports of almost 30 billion cubic meters and with winter already upon the population, it had been relaying on the largesse of German re-exported Russian gas to keep its street lamps lit and homes heated. Gazprom has consistently made the demand that Kiev must pay for its gas in advance, and despite German opposition to supply disruption, they have been able to largely set the terms of the agreement that is currently in place.

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