Russia's Putin Hopes to Settle Gas Dispute with Ukraine

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Researched by Industrial Info Resources (Sugar Land, Texas)--Russian President Vladimir Putin said he is hopeful that Ukraine can resolve a dispute with Russia's natural gas giant OAO Gazprom (PINK:OGZPY) (Moscow, Russia). In televised remarks after a cabinet session, Putin said that talks are possible with Ukraine for a new natural gas agreement.

"This cannot go on forever. It is just impossible," Putin said. "Everyone understands that very well. I hope we will not get to the stage where we are forced to switch to prepayment. In any case, if the terms you [Ukraine] agreed with our partners are fulfilled, if payments begin in the volumes you agreed on, then the Russian government will have to decide what it will be prepared to do in future co-operation in the gas sphere with our partners in Ukraine."

Russia increased the gas bill for Ukraine by 81%, starting from the second quarter, and cancelled two gas discounts that had been in place since 2010 and 2013, citing Ukraine's mounting debts. Ukraine's overdue gas debt from November through April is US$3.5 billion, according to Gazprom.

Gazprom Chief Executive Officer Alexei Miller said that Ukraine's debt will exceed US$5.2 billion by June 7 after Russia's delivery of gas worth US$1.7 billion in May.

"The deadline for payment is June 2, the end of the day," Miller said. "If Ukraine doesn't transfer the money, then from 10 a.m., on June 3, on Tuesday, limitations on the gas supply will be introduced. There is a little time left." Russia wants Ukraine to pay a back bill of US$2 billion this month in exchange for lower prices in the future.

The EU spends more than $1.4 billion per day on energy imports, according to the European Commission. In 2012, 66% of its natural gas was imported, with more than a third stemming from Russia.

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