Global natural gas giant Gazprom raised prices for Ukraine 44% after a discount deal expired, heaping financial pressure on the government in Kiev as it negotiates international bailouts.
Russia’s natural-gas export monopoly said in a statement the increase was necessary because Ukraine owes $1.7billion (£1billion) for gas it has bought since the start of 2013.
The government of ousted president Viktor Yanukovych had negotiated a discounted price last year as he grappled with protests after he dropped an association agreement with the European Union.
It “follows from Ukraine’s non-performance of obligations to repay the debt for gas supplies in 2013 and the lack of 100 percent payment for the current supplies,” Gazprom chief executive Alexey Miller said.
“The gas discount can no longer be used.”
The move raises the prospect that state-run Gazprom may threaten to cut supplies to Ukraine, which buys about half its gas from Russia, something that’s happened at least twice since 2006 because of payment disputes.
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Ukraine is completing a deal with the International Monetary Fund and waiting for US aid as the Crimea crisis puts relations between Russia and the West at their lowest ebb since the Cold War.
Ukraine is also critical to Europe’s energy security because about 15% of its gas supplies travels through its Soviet-era pipeline network.
In January 2009, a dispute between Russia and Ukraine disrupted deliveries to Europe for about two weeks during freezing weather.
The gas price is rising to $385.50per 1,000 cubic meters from $268.50 in the first quarter, Miller said today. The average price for European customers is seen at $382 this year, according to company’s forecasts.
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