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James Burgess

James Burgess

James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…

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Russia Claims Ukraine Owes it $7 Billion for Natural Gas it Never Used in 2012

Russia has calculated that Ukraine owes it $7 billion for gas imports that it was contractually obliged to pay yet never took delivery of in 2012.

It is probably not a coincidence that Moscow has made this demand just days after Ukraine signed a $10 billion deal with Royal Dutch Shell to develop shale gas plays, intended at reducing reliance on Russian imports.

Elena Yurieva, a spokeswoman for Naftogaz, the state energy company, told the Ukrainian news agency, UNIAN, that they had “paid on time for all the natural gas delivered to us by Gazprom.”

An industry source also told Reuters that, “in our opinion, we don't owe anything to anyone. All the gas which we should have bought last year according to the contract, we bought and have paid for.

Related article: Dow Opposes US Natural Gas Export Plans

It looks as if everything is linked to the signing of the agreement with Shell in Davos.”

Naftogas has been at odds with Gazprom ever since the previous prime minister of Ukraine, Yulia TYmoshenko, signed the exploitative deal back in 2009. Tymoshenko has since been jailed for her part in arranging the contract.

Under the deal Ukraine must buy a fixed volume of gas each year at $430 per 1,000 cubic metres, a level well above market prices.

Gazprom has calculated that Naftogaz was committed to buy 42 billion cubic metres in 2012, whereas they only imported 33 billion cubic metres. Ukrainian sources do not trust Gazprom’s calculations.

By. James Burgess of Oilprice.com

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