MOSCOW--Russian state gas giant OAO Gazprom said Monday it will
only ship fuel to Ukraine if it pays in advance, making good on a
threat that could lead to supply cuts affecting European customers
after late-night EU-mediated talks on debt repayment failed yield a
deal.
Gazprom said it hadn't received payment for a debt it put at
$4.458 billion by the Monday deadline it had set. "Ukraine will
receive gas only in the amounts it has paid for," Gazprom said.
There was no immediate reaction from Kiev.
The shift to prepayment is likely to lead to a reduction in
supplies to Ukraine and could affect Russia's shipments to Europe,
the bulk of which go through Ukraine. Industry analysts say the
initial effect on European markets of any supply disruption may be
limited because of current high inventories of gas in storage and
lower summer demand.
Ukraine has refused to pay its debts until Gazprom agrees to
reduce the price it charges the country to market levels.
EU-mediated talks over the weekend failed to reach a deal and
European officials blamed Moscow for refusing to concede.
Russia accuses Ukraine of intransigence and says Kiev's price
demands are unreasonable. It has sought to reassure its European
clients that it intends to meet its contractual obligations.
Write to Greg White at greg.white@wsj.com
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