Russia sees little chance of Ukraine paying for gas supplies

Russia sees no possibility of Ukraine paying for its gas supplies even if it was granted discounts because of the country's economic situation, Russian energy minister Alexander Novak said today, Reuters reports.

"We even do not have guarantees that even if the price was set at $100 (per 1,000 cubic metres) - I fantasise - that the Ukrainian side can pay these prices because there (in Ukraine) is complete insolvency at the moment," he told journalists on the sidelines of an energy conference.

The country is being asked by Russia to pay $485 per 1,000 cubic metres.

Meanwhile, Russian prime minister, Dmitry Medvedev said today that all consumers of Russian gas, including Ukraine, should abide by the simple rule that supplies should be paid for, calling for energy and politics to be kept separate, according to a separate Reuters report.

At an energy conference, which attended by ministers from OPEC, the Organisation of the Petroleum Exporting Countries, said, "We are talking about various crisis situations and I want to mention one very simple, almost banal, thing - it is necessary to pay for energy supplies that have been delivered," Medvedev told the conference.

"I hope all countries understand this, all consumers like those present and those who are not present for whatever reason at the forum, including Ukraine. Payments in general should not be linked to politics in any way."

Russia has in yet another move sought to increase pressure on Ukraine, with president Vladimir Putin saying in a letter released today that it only would deliver gas to its struggling neighbour next month if it paid in advance, Associated Press reported.

Putin's first warning had come in April in a letter to European leaders whose nations were customers of Russian state-controlled Gazprom natural gas giant. He added Moscow would switch to pre-paid deliveries if Ukraine, which served as a major conduit for Russian gas supplies to Europe, did not start settling its mounting gas debt.

In the second letter released by the Kremlin today, Putin pointed out that a meeting involving Russian, Ukrainian and the EU officials had failed to settle the issue, adding that Ukraine's gas debt to Russia had increased and reached $3.5 billion, even though Ukraine had received $3.2 billion bailout from the International Monetary Fund.

"Given the circumstances, the Russian company has issued an advance invoice for gas deliveries to Ukraine, which is completely in accordance with the contract, and after June 1 gas deliveries will be limited to the amount prepaid by the Ukrainian company," Putin said in the letter.