Gazprom Boosts Ukraine Overdue Invoice To $3.5 Billion After Kiev Forgot To Pay April Bill

Tyler Durden's picture

Looks like Ukraine won't be buying that gold with IMF loan proceeds after all.

Moments ago, in what has become a monthly tradition, Gazprom reported that Ukraine has once again forgotten to pay its latest monthly, April, gas bill. As a result, the total amount of money now due rises from $2.2 billion which was the invoice through the end of April, to $3.5 billion. As RT reminds us, and as was reported previously, this means that in June Ukraine might receive Russian gas only on the condition of advanced payment.

From RT:

"The deadline has passed, no payment has been received," said Sergey Kupriyanov, the company's representative. Earlier the company said that if the deadline was not met, Gazprom would issue an advance bill for June gas supplies on May 16.


Naftogaz, Ukraine’ state-owned oil and gas company, has a long record of late payments and unpaid bills to Gazprom, a problem which has only gotten worse as Ukraine has slipped into revolution and civil unrest.


The debt as of May 7, 2014 stands at $3.508 billion, Gazprom said Wednesday, which is up from $2.2 at the end of April.

This latest number is notable because as was reported overnight, Ukraine said that it had gotten the first IMF bailout tranche of some $3.2 billion. Naturally, since the Gazprom receivable is greater than this amount, and since Ukraine will further have to prepay future gas deliveries, it means that all of the money funded by US taxpayers among others and then some, will go straight into the pockets of the Kremlin.

Additionally, we also learned what the terms of the indirect US payment to Gazprom will be:


The IMF clarified that out of the $3.2 billion amount, Naftogaz may be eligible to use up just $2.16 billion to pay off its debts to Gazprom, according to documents prepared by the fund. In other words, not nearly enough to cover the due bill.

Furthermore, Ukraine is hoping that it will get another $13.7 billion from the IMF which however is in doubt if indeed this Sunday's referendum is not postponed and if the republic of Donetsk votes to effectively split Ukraine in two.

As for future payments...

Ukraine says it is ready to pay its gas debt to Russia’s Gazprom as long as the company lowers prices from $485 per 1,000 cubic meters down to $268.50, the price the country enjoyed under ousted President Viktor Yanukovich. Moscow ended the discount in April, raising gas prices nearly 50 percent.


The second $100 gas hike came in April when Russia canceled its Black Sea Fleet host agreement with Ukraine after Crimea voted to join Russia. Moscow said Kiev owes $11.4 billion for all the discounts it received since the 2010 deal.


Russian Energy Minister Aleksandr Novak warned over the weekend that the situation with gas transit through Ukraine had reached a “very critical point” as the gas supplies in underground storage facilities have dropped to a point where they can’t guarantee supplies from Russia to Europe.

The implicit threat as always remains that should the Ukraine be unable to fulfill its obligations to Russia, not just Ukraine's gas needs will be compromised: Gazprom supplies Europe with 30 percent of the continent’s natural gas. Half of these Russian supplies are shipped through Ukraine.

Said otherwise if Ukraine uses even a dime from the IMF funding for any other purpose: say to refuel its helicopters and/or tanks currently used to keep the "separatists" at various eastern cities at bay, Europe too will suffer a cut in its deliveries.

And now back to random headlines proclaiming some mythical, imminent "de-escalation" in the Ukraine.

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knukles's picture

Even if I forgot to pay my gas bill and I still couldn't buy a billion in shiny
Fact, it's not like I have any choice
O poor Ukraine, decadent problems... a billion gold here and a billion gold there and pretty soon you've filled the Fed's vault.

ParkAveFlasher's picture

Ukraine better watch out, or it will have to pay the $1.37 late fee.  Those things rack up, you know.

813kml's picture

I would add at least eight zeroes to that estimate.

Latina Lover's picture

So this was Putins secret strategy,allow the  Ukraine to push itself to the brink of financial meltdown, and  then get the IMF to pay out Gazprom. Afterwards, he can pick up the pieces.  Sounds like he learned a few things watching the western banksters, LOL.


813kml's picture

Putin is just toying with the West at this point.  Dollars won't mean a whole lot in the very near future, but he might as well get some arrears in the meantime.  I bet whatever gets paid will immediately be used to buy gold.

ParkAveFlasher's picture

The IMF has those zeroes covered. 

Gaius Frakkin' Baltar's picture

Western companies shut customers off after that long. Sounds like Gazprom is more than generous.

bonin006's picture

Putin was willing to overlook seriously late gas payments, and give a steep discount, as long he was getting southern port access via Crimea. Now that he gets that access for free, the gas will soon need to be paid for in full.

crazzziecanuck's picture

If Gazprom were truly "generous", it would be giving gas to the Ukraine for free.  Since that's a stupid idea, and Gazprom exists to sell gas it's simply letting the Ukraine run up it's bill that it will have to come to terms with in the future.  What's the saying about giving someone enough rope?  They'll hang themselves?  Kiev might be stpuid enough to be going full bore in that direction.

Or Ukraine is being a bit smarter and opportunistic.  Extracting more from the West, which is fine for both Kiev *and* Moscow.

franzpick's picture

Well actually it's you who has the i.m.f. covered, with part of your annual tax payment financing 17% of this and any other i.m.f. bailout. Feel better now? No?

Vampyroteuthis infernalis's picture

F*ck you IMF. I am tired of footing everyone else's bill. 

_ConanTheLibertarian_'s picture

With our goddamned stolen tax payer money!

Oh regional Indian's picture

Which was stolen from the rest of the world's labour via the petrodollar scam....

Give it up man, or recognize the whole circle-jerk.

Repatriations....all around? Zero Sum game.

HardlyZero's picture

Maybe...AIG can setup a 'super-special' Ukr insurance deal ?   It worked for MBSs in 2008 /.

Maybe do a 3-for-1 and bundle Greece and Cyprus....maybe bring in Turkey to manage it (and the coming EU Club Med re-org).

pods's picture

I don't think so. This bill is getting to the level of being Gazprom's problem, not Ukraine's. 

Putin invades and this 3.5 billion goes by by.

So he has a fine line to walk. Supporting Russians in Ukraine, but not getting involved enough where this becomes a weapon.

If he can avoid direct military intervention, he can turn the screws on the EU because they need his gas.

The US is prolly trying to press here to make him commit and bring this debt into play.


813kml's picture

Good point, Gazprom should get their dollars as long as Putin holds off invasion plans.  I think that was part of the urgency of the West to get the the civil war started quickly.  I think East Ukraine can hold its own for another week or so with under-the-radar support from Russian special forces.  All bets are off after the vote for secession.

BTW, Gazprom would like to milk the West for the arrears but it's not vital that they get it.  Ukraine has owed them for a long time.

HardlyZero's picture

I'm sure that is the plan. ... Debt swap for land deal.  Ukraine debt goes away *poof* and Russia gets Ukr (and probably Modava and Belarus too).   Modolva and Belarus won't be 'landlocked' any more...and no future threats to landlock Ukraine.

Time will tell as we enter Summer.

BlindMonkey's picture

Moldova is land locked, period. A forced marriage of Moldova and the Ukraine wouldn't work. Moldova is closer to Romainian as a language and people. They aren't Slavs.

The Ukriane is on the coast. Even if they lost Crimea and the East, they still have Odessa.

Continue With This's picture

Moldova is Romanian.


It was part of Romania until WW2, when Stalin stole it from Romania.

MarsInScorpio's picture



Your quote, "they still have Odessa"


Not for  long . . .


Poundsand's picture

Not really.  The reason the bill is in the billions is because Russia was already delaying, offsetting, and just simply underwriting the gas costs for the Ukraine as part of their ability to maintain influence.  For Russia, Ukraine not making a payment is revenue neutral as had the coup not occurred, the payments would not have been made anyway, nor would they have been demanded. 

The real issue is how in the world does the rest of the continent make up 30% of their gas imports should Russia shut off the flow.  This has far larger consequences than a mere $3.5 billion. 

Putin holds the cards here.  My prediction?  Putin manages the ebb and flow of the movement of the east and south of Ukraine back into the Russian sphere of influence which drags on through the summer.  The fireworks start this fall when the threat of a complete cut off of the gas has a chance to be felt by the populace.

Although I am sure that Obama and his minions have figured out a way to get all that gas from the US to Europe.  They are probably in some back room hitting that 'easy' button they saw on those Staples commericials and crossing their fingers.

StychoKiller's picture

I've got a couple of garden hoses they could use to hookup NatGas to the EU, but I ain't gonna spring for more than 200 ft of hose!

CrashisOptimistic's picture


GAZPROM produces gas for less than a dollar per thousand cf.  They don't have anything at risk.  They just have pending revenue.

Their inventory is underground.  They don't have big investment to repay.  The BPs and Totals and ENIs make the investment.  GAZPROM just collects and pays taxes.

What they have is the spigot.  You can say . . . you lose nothing by us not paying you.  You're overpriced.  Their reply is the ultimate one.

They squeeze your throat.

putaipan's picture


attention tylers- uncomfirmed from a bitcoin website, but if true ......

BlindMonkey's picture

I wonder if they will give a discount if the payment is accompanied by the scalps of the Right Sektor freaks? I would give a few points off for that.

LawsofPhysics's picture

How can we tell this is all politcal theater?  Easy.  The fucking gas is still flowing.  If Putin was serious, he would simply close the fucking tap or demand all payments must be in rubles.

Chupacabra-322's picture

Yup. Dully noted & pointed taken.

See Chupacabra's post below.

becky quick and her beautiful mouth's picture

silly! uncle warren says the same thing!

Winston Churchill's picture

Putin is still getting paid for the gas transiting thru'
Ukraine to Europe remember.
Not black or white at all.

NotApplicable's picture

Infinite shade o' gray.

Trick is, how does one prevent siphoning in this environment?

Matt's picture

Just send X amount down the pipes. Germany buys X amount. Ukraine syphons Y amount from the pipe? That's Germany's problem. Oh, I'm sorry Ukraine stole your gas, you should really do something to protect that pipeline.

MarsInScorpio's picture



Protect that pipeline? Like what - send in a couple of Panzer divisions?


No, Putin tells the West that you started this (even the most psychotic know the truth, even if they won't admit it in public), and the Kiev Butchers are your problem now. We send it - they steal it. You discipline your puppets.


And since we (Russians) can't monitor the flows any longer in the west of Ukraine, prove you aren't getting what we send . . .


Here's the bill - pay up. We don't insure against theft.


ebear's picture

Exactly.  And once you've played that card, then what?


Winston Churchill's picture

Better to cut off the oil , but that will piss the Chinese if oil goes to $150 pb.

SmittyinLA's picture

He can't Putin is running on contract law, Russia has delivery contracts they will not welsh on, his mission is to NOT welsh and make everybody else eat shit for later legal collection. 

Make no mistake Putin is building a legal case to prosecute and enforce contracts.

Putin's position: "we have a contract, they broke it, they owe us damages plus interest".

This is all going to end up decided in a NY court decades from now like the Argentina bond deal.

This is established contract law hundreds of years old, the only way the EU wins is if Putin is removed and Russia nuclear disarmed, and the alternative could be much, much worse. 

LawsofPhysics's picture

Hundred year old contract laws?  LMFAO!!!!

That's what I said when I asked the bank to "show me the fucking title" during the MBS bullshit.

You are fucking kidding right?

John Corzine, is that you?

Bioscale's picture

The fucking gas is flowing because the pipes in Ukraine deliver gas to customers in Central Europe. google up the event in 2009 when Russia stopped the gas and cut off part of Europe of its supplies because fucking stupid politicians of Ukraine refused to pay for it. Russia is not going to do this now as it would make a lot of people in Central Europe angry.

101 years and counting's picture

i love it.  the US is giving money to the IMF to give to Ukraine to give to Putin.  All so Putin can keep adding to his territory without ever having to fire a shot.  He's absolutely raking obama.  

pelican's picture

I don't love it because it is my fucking money going to Russia.  However, Putin has proved himself the better thinker and strategist.   Kerry just call mercy now, stupid sqaush head.





1stepcloser's picture

nice and instant qualification for a new home loan... Winning!

Billy Sol Estes's picture

With the cost of living sky high and the number of people leaving the state, I thibk $26 is feasible.