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Gazprom halts natural gas deliveries to Ukraine

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02GAZPROM-master675 Gazprom, Russia's main energy supplier, announced on Wednesday (1 July) that it had ceased deliveries of natural gas to Ukraine over a pricing wrangle. The company had not received advance payment for deliveries of natural gas in July, Alexey B. Miller, the chief executive of Gazprom, announced on Wednesday, and had cut the flow of natural gas to Ukraine with immediate effect.

“Gazprom will not deliver gas to Ukraine at any price without prepayment,” Miller said.

One day earlier, Naftogaz, the Ukrainian state energy company, said it would cease buying Russian gas because of disputes over prices and the breakdown of talks mediated by the European Union to negotiate a new contract.

Russia briefly cut natural gas supplies to Ukraine in June 2014 amid a growing conflict between the Ukrainian Army and pro-Russian separatists in southeastern Ukraine after the ouster of the president, Viktor F. Yanukovych. Disputes over gas prices between Russia and Ukraine had also led to shut-offs in 2006 and 2008.

Gazprom raised prices on gas after Mr. Yanukovych’s ouster. On Monday, the Russian prime minister, Dmitri A. Medvedev, announced a third-quarter gas price of $247.18 per thousand cubic meters for Ukraine, close to a $40 discount on Russia’s benchmark price. Previously, Russia had given the Ukrainians a $100 discount on the gas price, partly in exchange for leasing rights to the base of the Russian Black Sea Fleet in Crimea. That discount was canceled after Russia annexed Crimea in March 2014.

Analysts say that Ukraine has sufficient stores of gas to make it through the summer, when consumption is low. Ukraine has claimed that it can supplement its supplies by purchasing Russian gas exported to other countries, like Slovakia.

Ildar Davletshin, an oil and gas analyst at Renaissance Capital, noted that the instability in Ukraine would most likely delay a long-term agreement over gas supplies from Russia.

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“Possibly Russia does not want to increase its exposure to Ukraine, the risk of growing loans,” Davletshin said. “Also, they can use this as a way to put some pressure on the Ukrainian government.”

Ukraine is a transit corridor for Russian gas exports to the European Union, but Mr. Davletshin said the supply cut had “no critical implications short term in terms of consumption or gas flow to Europe.” He added that Ukraine would likely have to strike a deal in the fall in order to replenish stores of natural gas before colder temperatures set in.

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