Russia Sets Ukraine June 16 Deadline as Gas Talks Resume

(Business New Europe – bne.eu – Tim Ash, Standard Bank – June 12, 2014)

Bloomberg reports that Russia gave Ukraine an extra six days to make payments for natural gas as the countries resumed European Union-brokered talks in Brussels on June 11. The new deadline is 10 a.m. Moscow time June 16, Alexey Miller, chief executive officer of Russian gas exporter OAO Gazprom, said today in Brussel…

Bloomberg reports that Russia gave Ukraine an extra six days to make payments for natural gas as the countries resumed European Union-brokered talks in Brussels on June 11.

The new deadline is 10 a.m. Moscow time June 16, Alexey Miller, chief executive officer of Russian gas exporter OAO Gazprom, said today in Brussels after meeting with EU Energy Commissioner Guenther Oettinger.

Ukraine won’t pay before Russia accepts a new “package” deal, including gas price changes, Ukrainian Energy Minister Yuri Prodan said after that, according to Interfax. Both commented before the three-way negotiations between Oettinger, Prodan and his Russian counterpart Alexander Novak started at about 10 a.m. local time.

Oettinger is optimistic an agreement to end the gas price dispute can be arrived at in the next few days, he told reporters yesterday evening. The talks were postponed from yesterday because of the late arrival of the Russian delegation to Brussels, the EU said.

Tim Ash said in a note:

Pretty good summary by Bloomberg over the state of play on gas talks – both sides basically playing games, to position for advantage with the Europeans.

Beyond that, on the ground in Donetsk/Luhansk some smaller scale shelling continues, with some casualties reported – the Ministry of Health reports 210 dead now in the SE through the recent unrest. We are still someway from a ceasefire – albeit note that interesting changes announced in the leadership of the seperatists in Donetsk, which might suggest that Moscow is tightening its grip therein, and perhaps control over the movement on the ground.

On the ground, anecdotal evidence suggests that all this is proving pretty disruptive to economic activity – Donetsk and Luhansk still account for around 15% of Ukrainian GDP, with strong ties into the rest of the Ukrainian economy. Battles for control of assets on the ground, appears to be continuing.

On OSCE-brokered direct talks between Russia and Ukraine, agreed upon at the Normandy D-day talks between Putin and Poroshenko, Ukraine’s acting foreign minister noted that the two sides are currently only talking about the format for talks – i.e. “talks about talks”.

Across the border with Russia, the Ukrainians are still complaining that Russia is still not doing anything to restrict the flow of arms/fighters across the border – despite the Ukrainian side’s decision to close 7 border crossings in Luhansk and Donetsk last week.

In Kyiv, we are still awaiting a couple of key appointments from Poroshenko, i.e. the roles of foreign minister, and defense minister – the two positions he has the right to appoint under the 2004 constitution. Beyond that Poroshenko has signalled that he is happy with broad composition of the Yatseniuk cabinet – but lets see if behind the scenes he is working to deliver other changes. Appointments into the presidential administration over the past few days have been pro-business, and seen to be somewhat appeasing of ethnic-Russian interests.