Ukraine: Energy Minister Seeks to Double Gazprom Transit Fees

Ukrainian officials will meet today with Russian officials and representatives from state-owned energy giant Gazprom to discuss Russian natural gas supplies to Ukraine. There is no clear timetable for the talks, as quarreling between the two sides has persisted and indications are that myriad issues are still unresolved. Ukrainian Energy Minister Volodymyr Demchyshyn recently stated in an interview with the Wall Street Journal that Kiev seeks to double transit fees it charges Gazprom. Currently, Gazprom is charged $2.88 to ship 1,000 cubic meters 100 kilometers, though Kiev would like to see the rate ascend to $5.50. Demchyshyn intimated that other issues still stood in the way of a deal’s completion, though refrained from providing additional detail.

Gazprom recently received an additional $15mn from Ukraine’s Naftogaz as an advance payment on forthcoming transfers of natural gas. Small payments have been made in lieu of larger sums due to Ukraine’s precarious economic situation. It is expected that negotiations between the two sides, if deemed successful in Ukraine, would afford Kiev greater liquidity with which to make larger payments to Gazprom.  While it is unlikely that Russia capitulates to Ukrainian demands, the continuance of sanctions imposed against Russia and the state of oil prices could leave Moscow with few other options.

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