The representatives of Ukraine and Russia will again attempt to solve their differences when it comes to supplying natural gas at a new round of talks that will begin on Wednesday in Brussels, Reuters reports. The pressure on Ukraine is growing, as temperatures have dropped below zero on its territory, but Russia does not seem to relent – it demands upfront payments for the supplies Ukraine needs for the winter.
Russian state natural gas supplier Gazprom has suspended deliveries to Ukraine this June, as the country has gathered a large backlog in payments towards the Russian purveyor – according to Moscow, the total amount owed by Ukraine is around $4.5 billion. As the deliveries were suspended during the summer, Ukraine did not feel their full effect until these weeks, when temperatures dropped below the freezing point in the country. Local gas distributor Naftogaz has set aside $3.1 billion to pay off a chunk of its debt toward the Russian supplier, but this might not help at all: Russia now demands upfront payments for the gas needed, otherwise it might not resume deliveries to Ukraine.
Ukraine is working on raising money from all possible sources, including the European Union – the EU might help Kiev with a loan of 2 billion euros to ease the situation – but, according to Finance Minister Oleksandr Shlapak, money alone might not be enough. According to the Minister, the Russian side seems unwilling to reach an agreement. Besides, it could be very hard for Ukraine to come up with enough assurances to satisfy the Russian suppliers, given its history of delays with its payments. Even more, Ukraine also has its demands – written guarantees that an eventual agreement on the prices will be long term.
Both parties have a lot at stake – Russia delivers half of its gas to the European Union (roughly a third of the bloc’s needs) through Ukraine, while Ukraine relies on Russian gas for around 50% of its needs. The situation could easily escalate into a “gas war”, that could harm both parties both in the short term and the long term.