Ukraine, Russia clash over gas contracts

Ukraine and Russia are on the verge of a potential row over the gas supply contract executed in 2009 for the delivery of Russian natural gas to Ukraine, as the former Soviet bloc member is seeking alternative sources to reduce its dependence on Russia for energy.

Ukraine's gas monopoly Naftogaz has said that it has cut short the import of Russian gas to 27.7 billion cubic meters (bcm) this year from the originally agreed 52 bcm due to higher prices. It also warned that it would slash next year's import to 20 bcm.

The gas supply contract between Naftogaz and Russian gas giant Gazprom includes a ''take-or-pay'' clause that covers 80 per cent of the contracted gas supply. As per the terms, Ukraine is required to pay for a minimum of 41.6 bcm of gas.

The Ukrainian fuel and energy minister Yuriy Boyko said in an interview with Inter Television over the weekend that his country is prepared to defend its interests over the breach of contractual obligations under the existing gas imports contract.

Boyko said Ukraine is purchasing some 26 bcm which is less than the contracted quantity for 2012.

Russia on the other hand, insists that Ukraine pay for all the gas it agreed to buy, whether it accepts the full volume or not and the contracted volume for 2012 is already fixed and cannot be changed within six months of the contracted delivery date.