The Ukrainian Prime Minister has ordered his nation’s authorities to prepare for a cut-off of natural gas flows from Gazprom tomorrow (16 June) as Russia rejected its latest price proposal. The EU suggested an interim price of $326 per 1,000 cubic meters ($8.25 a million British thermal units), which Ukraine would accept, compared with Gazprom’s final price offer for Ukraine of $385 per 1,000 cubic meters.
Ukraine must pay for gas delivered in November and December and some of its bill for April and May by 10 am Moscow time (7 am GMT) on Monday or risk being moved to a system of advance billing, with supply dependent on payments made.
Whatever happens in the negotiations there seems little prospect of an immediate supply shortage in Europe however. Although the EU relies on Russian gas piped through Ukraine for 15% of its natural gas needs, the region’s storage facilities are currently well equipped to cope with a disruption being about 64% full compared with about 38% a year earlier.
Meanwhile Gazprom keen to ensure that its European customers get all required volumes appears ready to increase supplies through the Nord Stream and Yamal-Europe pipelines.
Russia has extended its deadline twice in the past few weeks to allow more time to reach a deal but has made clear it will not do so again. Final talks are underway today (Sunday).