• 1 min UK Offers North Sea Oil Producers Tax Relief To Boost Investment
  • 2 hours Iraq Wants To Build Gas Pipeline To Kuwait In Blow To Shell
  • 4 hours Trader Trafigura Raises Share Of Oil Purchases From State Firms
  • 6 hours German Energy Group Uniper Rejects $9B Finnish Takeover Bid
  • 7 hours Total Could Lose Big If It Pulls Out Of South Pars Deal
  • 9 hours Dakota Watchdog Warns It Could Revoke Keystone XL Approval
  • 1 day Oil Prices Rise After API Reports Major Crude Draw
  • 1 day Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 1 day Gazprom Speaks Out Against OPEC Production Cut Extension
  • 1 day Statoil Looks To Lighter Oil To Boost Profitability
  • 1 day Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 1 day Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 1 day Whitefish Energy Suspends Work In Puerto Rico
  • 1 day U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 2 days Thanksgiving Gas Prices At 3-Year High
  • 2 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 2 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 2 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 2 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 2 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 2 days ConocoPhillips Sets Price Ceiling For New Projects
  • 5 days Shell Oil Trading Head Steps Down After 29 Years
  • 5 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 5 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 5 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 5 days Venezuela Officially In Default
  • 5 days Iran Prepares To Export LNG To Boost Trade Relations
  • 5 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 6 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 6 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 6 days Rosneft Announces Completion Of World’s Longest Well
  • 6 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 6 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 6 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 6 days Santos Admits It Rejected $7.2B Takeover Bid
  • 7 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 7 days Africa’s Richest Woman Fired From Sonangol
  • 7 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 7 days Russian Hackers Target British Energy Industry
  • 7 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
Alt Text

Can The Gas Glut Kill The Permian Boom?

The natural gas glut is…

Alt Text

Keystone XL Pipeline Gains Approval After A 9-Year Battle

Nebraskan regulators have approved the…

Alt Text

Are Electric Cars As Clean As They Seem?

Electric cars are set to…



EurasiaNet.org provides information and analysis about political, economic, environmental and social developments in the countries of Central Asia and the Caucasus, as well as in…

More Info

Gazprom Threatens To Cut Off Gas Supply To Kyrgyzstan

Gazprom Threatens To Cut Off Gas Supply To Kyrgyzstan

When Russian gas giant Gazprom bought up Kyrgyzstan’s natural gas distribution system in 2014, some grumbled about loss of sovereignty, while others were relieved the purchase meant gas cut-offs could become a thing of the past.

So there will be some dismay if Gazprom-Kyrgyzstan, as the local affiliate is called, follows through on threats to suspend gas supplies in the country.

News website Zanoza.kg on February 18 reported that Olga Lavrova, Gazprom-Kyrgyzstan’s deputy general director for finances, said the danger of a cut-off has been precipitated by a dispute over debt with German-owned plate glass manufacturer Interglass.

“Because of the debts owed by Interglass, the whole of Kyrgyzstan could end up without gas,” Lavrova was quoted as saying.

Gazprom-Kyrgyzstan has since its incorporation been engaged in an uphill battle to force its customers to pay for the fuel that they use. Interglass is by far the largest delinquent debtor with 698 million som in unpaid bills and another 419 million som in interest outstanding on those debts, according to the gas supplier. As of February 1, that puts Interglass’ total debt to Gazprom at a whopping $15 million at the current rate. Related: Why Is Well Decommissioning So Slow In Canada?

Lavrova said Interglass continues to use 1.2 million som worth of gas daily, while only usually paying 2-3 million som per month.

Failure by the glass producer to pay its bills has caused Gazprom-Kyrgyzstan in turn to accumulate debts to its suppliers of $12.5 million, Lavrova was quoted as saying.

“Gazprom-Kyrgyzstan has not paid for its supplies of natural gas in November 2015. The supplier has allowed for a delay in payment, and is not charging interest, but this situation cannot go on indefinitely,” Lavrova said.

But if the supplier is not paid, flows of gas will come to a halt, she said.

Gazprom-Kyrgyzstan says it has initiated bankruptcy proceedings against Interglass in an attempt to claw back some cash through a seizure of assets, but to no avail. Interglass apparently has no money in any of its bank accounts inside Kyrgyzstan and the company’s assets are being held as collateral by a third party. Related: Oil Rally Stalls After Iran Declines to Commit to Freeze

Online news agency 24.kg quoted Saltanat Djumagulova, an adviser to Gazprom-Kyrgyzstan’s general director, as saying that gas supplies to Interglass could be suspended within the coming two weeks unless debts are cleared.

“It turns out that we cannot secure the money owed to us by any means. So we have decided to cut off the company in the near future. We want to stop the further accumulation of our debts and see no other way of settling the issue,” Djumagulova said.

Such disputes are a far cry from the optimism that accompanied Gazprom’s entry into Kyrgyzstan. Back then, Gazprom was promising to invest 20 billion rubles ($560 million at the time) into upgrading the country’s aging gas distribution network and to extend the coverage of gas supply from 22 percent of the population to 66 percent.

As part of the symbolic $1 purchase of Kyrgyzstan’s gas company, then called Kyrgyzgaz, Gazprom also agreed to saddle itself with around $40 million worth of debt.

In fact, Gazprom-Kyrgyzstan in January finally paid $41.3 million owed to Kazakh supplier KazTransGaz for deliveries and “unauthorized gas bleeds” between 2004 and 2014. Related: Activist Investors Crushed By Oil Crash

Should Gazprom-Kyrgyzstan decide it can no longer supply gas, it could further strain Russia’s admittedly high standing among the population.

In January, Kyrgyzstan’s parliament voted to cancel a deal with Russian companies to build two major hydropower facilities after concluding that the projects were going nowhere.

Conscious of the importance of preserving friendly ties with Moscow, on which Kyrgyzstan remains heavily dependent, President Almazbek Atambayev adopted a strikingly forgiving tone ahead of the vote in parliament.

“In the current situation, when the economy of Russia is not on the rise, let’s just say, and the trend for oil prices is only going downward, we see that these agreements… well, for objective reasons they cannot be fulfilled by the Russian side,” he said.

UPDATE: Gazprom-Kyrgyzstan quickly rowed back from its official’s statements later on February 18 by assuring the public that natural gas supplies in Kyrgyzstan would remain “stable and uninterrupted.”

Still, the Russian-owned company injected a hint of warning into its reassurances, which appear to have been issued in reaction to a flurry of media reports about Lavrova’s possibly ill-judged remarks.

“The inability of Interglass to settle its accumulated debts negatively impacts Gazprom-Kyrgyzstan’s ability to fulfill its duties to pay for the gas that is delivered to this country,” the company said in a statement.

By Eurasianet

More Top Reads From Oilprice.com:

Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News