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Vincent Mundy / Bloomberg

Russia halts gas supply to Ukraine amid pricing dispute

Gazprom ceases shipments to neighboring Ukraine after failed negotiations over discount rate

Russian gas company Gazprom halted supplies to neighboring Ukraine on Wednesday after the collapse of price talks, company officials said.

Gazprom CEO Alexei Miller said that Russia halted the supply at around 7:00 GMT because Ukraine didn't make an advance payment for July's delivery.

“Gazprom is not going to send gas to Ukraine at any price without the advance payment,” Miller said in comments carried by Russian news agencies.

Russian and Ukrainian energy ministers on Tuesday failed to reach an agreement on future supplies. Russia offered Ukraine a price of $247 per cubic meter, a $40 discount from the current rate. Ukraine wanted a $100 discount.

Russian Energy Minister Alexander Novak insisted that the discount that Ukraine is asking for is “unjustified” and would put the cost of supplying Ukraine below the market rate.

Ukrainian officials didn't immediately comment on Wednesday about Gazprom's decision to halt supplies. But Ukrainian Energy Minister Volodymyr Demchyshyn said Tuesday that the discount Russia had offered wasn't enough and that Ukraine would buy gas from other nations starting July 1 until an agreement is reached with Russia. Gas consumption is low at this time of year, allowing Ukraine to bargain for better terms.

Ukraine says it has found cheaper supplies from other European nations that resell the gas they receive from Russia. Moscow has described these so-called reverse supplies as illegal.

Ukraine imported a third of its total gas supplies from Russia in the first six months of the year, the national pipeline operator said Wednesday.

Pricing disputes between Russia and Ukraine in the past have led to gas wars, leaving other European nations without heating in the dead of winter.

The last deal that Russia and Ukraine signed in October offered Kiev a discount, but required it to pay in advance for gas shipments.

Ukraine, which is struggling to balance its budget amid protracted fighting against Russia-backed separatists in the east, relies heavily on gas supplies for its metals and machinery industries.

Al Jazeera and The Associated Press

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