Ukraine’s interim government may have lost the long-standing natural gas discount they were getting from Russia in the past, but negotiations for a new one are possible, according to Russian Energy Minister Alexander Novak.
According to Novak, the Russian government is willing to discuss a new price discount provided Ukraine actually starts making good on its payments for gas delivered under the old discount program, through April 1.
That’s $2.237 billion in back payments, just to get them current through the first of April, and reflects how long it’s actually been since Ukraine was paying for its gas, no matter what price was being charged on paper.
Russian officials announced yesterday that Gazprom, the world’s largest natural gas company, will insist on up-front payment before any future deliveries to Ukraine. Though this makes sense on the surface, the situation is more complicated than that.
That’s because a lot of Russia’s paying customers are in central Europe, and that gas goes through the pipeline into Ukraine. Cutting off gas to Ukraine risks them trying to syphon off those supplies, or making shipments to Europe completely impossible. It’s the desire to protect those markets that has Russia interested in cutting a deal with Ukraine, though with the interim government so far unwilling to pay its bills a deal may be hard to broker.