Russia Offers Ukraine Deal On Gas Debt: Gazprom

PARIS, France -- Russian energy giant Gazprom has offered Ukraine a compromise deal on its outstanding gas supply debts, the company's deputy chairman Alexander Medvedev told reporters Friday in Paris.

Alexander Medvedev

"We hope to find a solution. We are making proposals to our Ukrainian colleagues," said Medvedev, who is also head of Gazprom's export arm.

Gazprom says Ukraine's Naftogaz state gas company owes it 2.4 billion dollars (1.8 billion euros) and Russian officials have warned of steep price rises or cuts in supplies if the outstanding debt is not cleared.

Kiev disputes the size of its tab, arguing that some of the penalties for late payment are unfair, and the issue has further embittered already tense relations between Moscow and the westward-leaning former Soviet republic.

Ukraine agreed last month to pay the debts owed for September and part of those owed for October by December 1. Gazprom has said part of this sum has now been paid back but not the full amount required.

Gazprom -- a firm whose executives have extremely close ties to the Kremlin -- have warned that it could raise the price to 400 dollars per 1,000 cubic metres, more than double what Ukraine pays now.

Currently Ukraine pays Russia 179.5 dollars for 1,000 cubic metres of gas, much less than what European Union countries pay. A sharp rise would hurt Ukraine's economy, already ravaged by the global crisis.

Analysts warn that any cut in gas supplies could have knock-on effects elsewhere in Europe, as much of the Russian gas exported there passes through Ukraine, although a previous dispute did not hurt western supplies.

Medvedev also said that Gazprom hoped to triple its supply of gas to France within three to five years, from half a billion cubic metres per year to 1.5 billion, essentially through seeking out small-scale business customers.

France's main gas firm, the partially state-owned Gaz de France, already buys 12 billion cubic metres of gas per year from the Russian supplier, but the giant is keen to become major actor in the French market in its own right.

Source: AFP