, Salem, MA


April 11, 2014

Putin: Ukraine debt threatens Europe gas supplies


Ukrainian Prime Minister Arseniy Yatsenyuk added to European fears of a disruption in gas supplies as he criticized Ukraine’s national energy company Naftogaz of mismanagement.

“Naftogaz has 7.2 billion cubic meters of gas in underground storages while it is supposed to be 20 billion. It wasn’t me who stole that gas,” he said.

Energy Minister Yuri Prodan said earlier this week that Ukraine has not been getting any new gas pumped from Russia amid the pricing dispute, which means it has been relying on storage supplies it previously bought.

The effect of a possible halt in gas supplies could be harsh for Europe but probably not as severe as in January 2009, since Gazprom has built a new pipeline bypassing Ukraine and increased the capacity of existing ones.

The IMF has pledged the loans to Ukraine on condition it undertake economic reforms, with the United States and EU also providing support. The Ukrainian parliament on Thursday passed some of the necessary laws, including cuts in import duties.

The IMF loans, however, are likely to come in several tranches over two years while the Kremlin seems to be demanding the debt to be settled immediately.

U.S. State Department spokeswoman Jen Psaki said Thursday that Washington is “taking immediate steps to assist Ukraine, including the provision of emergency finance and technical assistance.” She added that the U.S. is also trying to encourage Ukraine’s western neighbors to “reverse natural gas flows in the pipeline so that Ukraine can access additional gas supplies if needed.”

In other news yesterday:

— Ukraine’s acting president Oleksandr Turchynov said pro-Russian activists occupying government buildings in the eastern cities of Donetsk and Luhansk will not be prosecuted if they lay down their arms. Protest leaders defied the request to leave.

— Tensions were still high in Donetsk, where about 1,000 protesters stood outside the occupied building chanting “Russia! Russia!” Activists also reinforced the barricades, piling up rubber tires or building brick walls out of cobblestones. They have demanded a referendum on broader autonomy or even secession from the new Kiev authorities.

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