Gazprom says Ukraine failed to pay USD 882 mln for August gas

Макроэкономика 29.10.2013 A Ukrainian entity owes USD 882 mln to Gazprom for natural gas that it imported in August, said CEO Alexey Miller, as reported by the RIA Novosti news agency on October 29. Gazprom agreed to a payment delay till October 1 which has yet to be received, Miller said. The breach of payment terms may result in Gazprom requiring prepayments for gas (currently, Ukraine makes payments in the first days of the following month). The biggest private gas importer to Ukraine, Ostchem, commented to the Interfax news agency today that the company has met all its contractual obligations to Gazprom. Alexander Paraschiy: The payment delay, not previously announced by any side, adds more clarity to why Ukraine did not face enormous pressure on its currency in September and October. This news adds even more risk to the hryvnia for the coming month. Interestingly, Gazprom’s statement on Ukraine’s breach (arriving after it had been already delayed by almost one month) surfaced only after the October 27 meeting of the Ukrainian and Russian presidents at which Vladimir Putin was reportedly unable to persuade Viktor Yanukovych to abandon the Association Agreement with EU, scheduled for signing on November 28-29 in Vilnius. So far, we do not know of other preferences Gazprom has given Ukraine beyond payment delays for August gas (and we can assume a similar payment exists for September gas). We also know of a deal enabling Ukraine to import 5 bcm of gas for USD 260/tcm, according to Putin (USD 269, according to Miller). But we suspect such preferences were given with the hope of political compromises from Ukraine, which implies new risks should it sign the Association Agreement with the EU.