Russia Rejects Ukraine's Gas Deal; 2am Eastern Deadline Looms

Tyler Durden's picture

As suspected given the huge distance between the bid and offer, the EU-brokered Ukraine-Russia gas deal has failed:


Gazprom seeks $1.95bn from Ukraine for past shipments of gas by the 10am Moscow time deadline (2amET) and will continue to seek upfront payments for any further shipments.

As Reuters notes,

Russia and Ukraine failed to resolve a gas pricing dispute at talks and a 0600 GMT deadline for Ukraine to pay $1.95 billion in gas debts still stands, a spokesman for Russian natural gas producer Gazprom said on Monday. Spokesman Sergei Kupriyanov said after talks in Kiev that Russia would switch to an advance payment system if it did not receive the money, meaning Moscow could cut off gas supplies to Ukraine.

Cutting supplies could disrupt the gas flow to the European Union.

"The talks in Kiev ... finished around 2:30 a.m. Moscow time (2230 GMT on Sunday). The Russian side is expecting payment of the accumulated gas debt of $1.951 billion before 10 a.m. (0600 GMT) on June 16," Kupriyanov said.

"If the funds are not paid, gas supplies will, as was announced earlier, be switched to a pre-payment system."

Russia and Ukraine disagree how much Kiev should pay for the natural gas it receives from Russia.

European Energy Commissioner Guenther Oettinger told reporters in Kiev that he had made a compromise proposal during talks which began late on Sunday but Moscow had declined the offer. This follows after weeks of Oettinger assuring anyone who cares to listen to him that a deal was assured. Apparently not.

The lack of a deal is hardly surprising given the distance between bid and offer (as Bloomberg notes),

EU proposed gas price range of about $300-$385/kcm, Naftogaz CEO Kobolyev says at news conference in Kiev.


Gazprom sought about $500/kcm; Ukraine won’t pay $500/kcm: Kobolyev


Ukraine was ready to accept EU proposal: Ukraine Energy Minister Proda

It seems the market had begun to expect this failure...

OAO Gazprom sank to a one-week low in New York on concern Ukraine won’t pay the Russian producer money it owes for natural gas supplies by today’s deadline, potentially disrupting shipments through the country.




“There is a risk,” Mattias Westman, who oversees about $3.6 billion in Russian assets as chief executive officer at Prosperity Capital in London, said by phone on June 13. “Investors are focusing on the outlook for Gazprom’s revenue if there are disruptions of gas supplies to Europe.”

But now the next phase of the Russia vs Ukraine/Europe escalation commences, as Russia truly flexes its commodity muscles.

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CrashisOptimistic's picture

The EU's proposal is lower than what the rest of Europe is paying for Russian gas, so if Russia had accepted it, they could have demaned renegotiation of all the other contracts.

knukles's picture

Sweat in the Heat before you Freeze in the Dark

AlaricBalth's picture

Today forests cover about 11 million ha of all Ukrainian territories. In 1978, the general forest area of the Ukrainian SSR was 9.7 million ha, of which 8.3 million were covered with trees. On the average 13.6 percent of Ukraine's territory is under forest.

Better start chopping.

Latina Lover's picture

The Ukrainian Oligarchs wanted to buy gas at a discount (say  $325) and resell it in Europe and/or the rest of the Ukraine at $385 per cubic foot, pocketing the difference for themselves. Unfortunately for these greedy assholes, they are playing a very weak hand.


There is no reason for Russia to give them a discount, and many reasons to fuck them really hard for their constant threats and provocations against Russian and Russian interests. Meanwhile the Ukrainians continue to face more austerity, more pension cuts, higher prices for food and gas, and an oppressive fascist government that stamps out any dissent. Worst of all, their Kiev Kriminal Kabal is beholden to the USSA/Nuland/Nudlemans, who will bend the Ukies over, giving it to them, good and hard.  Just ask the Iraqis, Libyans, Afgani's,...etc etc

vincenze's picture

The Ukrainian Oligarchs own plants that consume a lot of energy producing steel, chemicals, fertilizers, etc.

They were very profitable when Russian energy was cheap.


Latina Lover's picture

and when they could sell their output to Russia, who was Ukraines largest single market. Just ask Porkyschenko, so called chocolate king.

Volkodav's picture

yeh, that and profitable by the fact they stole them in first place ....

TheFourthStooge-ing's picture


Better start chopping.

All that green wood won't be very dry by winter. Better start chopping the furniture too.

And don't you dare complain about the cold to the Yatzi junta in Kiev. They'll give you a nice little gift of white phosphorus to keep warm, just like they did in Donbass, and call it a Slavyansk heater.

Volkodav's picture

Da..  the Pravyi Sektor Pollack "Forest NAZI's" that don't die as cannon fodder for the

Kyiv monsters will be busy other than burn women and bomb children playing...

How many make it back to Lyiv? They were always expendable..


TruthHunter's picture

So the Ukrainians freeze in the dark til they come to their senses. Big deal...

Who protects the pipelines to Europe?

It's not about dinosaur farts, its a pretext for a fight.


Headbanger's picture

Gee, ya thunk thinks might change a wee bit when it gets a little cooler come October comrade??

CrashisOptimistic's picture

Not quite as seasonal as presumed.

Nat Gas makes lots of electricity.

Newsboy's picture

Ukraine takes the hit since nobody will pick up that bill.

Russia is trying hard to avoid being zombie-bitten. 

Very harsh game the US is playing with real people.

Latina Lover's picture

The Ukies deserved to get screwed, punishment for stupidly overthrowing one old fat oligarch, replacing him with another old fat oligarch, while losing Crimea, Donetsk, Lugansk, and most of their economy.They keep insulting and threatening Russia, the only country that would genuinely help them. Meanwhile, the rest of Europe is trying to maximize their exploitation of Ukraine.


In less than 12 months, the Maidanites will be  forced to whore their daughters, send their sons into USSA inspired wars as cheap cannon fodder, and send their babushkas to rifle garbage cans.

i_call_you_my_base's picture

Agree. Neither choice was good, but when you're bankrupt, there are only bad choices. The better choice was Russia. Cheap gas and a $25 billion bail out. It wasn't a bad deal.

Latina Lover's picture

Ultimately, the best choice for the Ukies would be to default on their debts and screw both the West and Russia. However, the Oligarchs were  not about to lose most of their assets, hence the IMF, the better way to bend over the Ukie public.

i_call_you_my_base's picture

I tend to agree with you on the default v. bail out question, but it's tough. When you're a smaller country you are at the mercy of the large blocks. If ukraine defaults and are punished by both sides, whoever made the decision won't last long in office. A politician can't weather a long-term decision with short-term losses.

As debt always is, it's a problem only solved by not being in that situation in the first place.

Headbanger's picture

Oh nein nein nein nein..

When you owe a bank $1000, the bank owns you.


But when you owe the bank $100,000,000,000

You own the bank!

Volkodav's picture

Well,   Ukies themselves are not in control...Kyiv tyrannical squatter govt is...

Best start is the east keep resist and  kick the Oligarchs, take over their stuff..

Russia is willing to work with the people.



Jack Burton's picture

Total Ukraine default on all outstanding debts. This is their only play. Western banks would be fucked.

Russian gas suppliers would take a 4 billion dollar hit.

The morning after total default, only god knows what would happen.

People without jobs, pensions, health care and all forms of social welfare. All gone in an eye blink.

Ukraine is promised prosperity from the EU. They need only take 17 billion in IMF loans. Institute IMF austerity plans. After a few years it is expected economic growth will take off. This is the story the EU is selling. But the EU does not control energy supplies or prices for Ukraine. Only Russia can provide abundant and cheap gas. Now the question, "given the nazi coup government in Kiev, why would Russia send discount gas to Ukraine?"

Volkodav's picture

It was a great deal.

compare to a quick peruse of the EU promoted agreements...IMF demands..etc.

and loss of any illusion of sovereigty that Ukrainians had held on to... 

fxrxexexdxoxmx's picture

Damn right. Only Putin should be allowed to make billions stealing the natural resources of Mother Russia. Anyone or anything which gets in the way of him getting richer is the work of Neo Nazis, the CIA and Mossad.

If the gas gets cut off does that mean the pro Russian people of Ukraine still get gas? How will they do that?

kowalli's picture

Google gas lines in Ukraine... JUSt do it before posting something like this

Buck Johnson's picture

I know, they won't accept.  And the way they see it if yoiu want to support Ukraine so much give them the money to pey us.

LetThemEatRand's picture

I'm just glad that when the West "blinks*," it's my tax dollars that will go to pay the bill which is largely owed to central banks.

*is it blinking when the West is controlled by banks that want to have us taxpayers pay back the debt owed to them and this whole thing is a charade to make the American public believe that we had to pay the banks back for some humanitarian reason?

KarlGDenninger's picture

lots of hardware moving to Ukraines border. Check out youtube. I get the feeling this wasnt just a gas deadline I think Russia may have had enough

LetThemEatRand's picture

There are a lot of pieces falling into place.  We have the neo-cons telling us that we never should have left Iraq as the mess we left behind falls into inevitable chaos, we have China fucking around with Vietnam, we have Japan and China fucking around over some islands (that's been quiet for a while), we have the whole Russia/Ukraine situation, and then there's all the really important stuff like the fact that oil is spiking during a period where consumers are already tapped out, and then there's that whole thing where the global commodities markets are about to implode unless they can put the toothpaste back in the Chinese derivative market tube reported on ZH over the last few days, and ... I'm sure I'm missing a bunch of stuff.

fxrxexexdxoxmx's picture

You forgot to mention that Obama was at fund raiser before and after he went golfing.

Andy Lewis's picture

Why isn't he at home fucking the Mooch?

Wahooo's picture

Mr. Mooch is fucking Reggie Love.

Ms. Erable's picture

Because, while dumb as a post, he's not blind.

CrashisOptimistic's picture

Odds 50/50, maybe higher, that China did some drilling off Vietnam and came up empty.

If there's nothing there, there's nothing there.

Which in a macro context is the worst of all possible results.

Uber Vandal's picture

Only 13 more days to Arch Duke 100 year Anniversay, and then one month until the other 100 year Anniversary.........

Bingo Hammer's picture

I'm thinking first week of July that the "European Summer" really get's going....flashpoints are appearing everywhere

ebear's picture

Can't happen until the fall.  The French are on vacation for all of July and August.

i_call_you_my_base's picture

Now that is what you call "costs".

AdvancingTime's picture

This is a big deal! It does not help that this is happening at a time that Iraq is falling apart. Allowing events to deteriorate into a major war or possibly into what some see as World War III is becoming a reality.

As insane as it appears this could become the final outcome. The location of this as a military confrontation is right in Putin's backyard and this is a strong advantage for Russia. It is silly to think Putin and Russia will back down. This means poking the bear is not a smart move. More on this subject in the article below.


CrashisOptimistic's picture

Nothing quite so low as a weasel that pimps his blog on other people's traffic.

JustUsChickensHere's picture

WWIII has been underway for a few years.... it is being fought differently this time, because all the rational players do not want it to be settled with Nukes.

The result is a huge currency war, and multiple colour revolutions... which are just the new sort of term for battle area engagements. Multiple theaters of war, including the massive propaganda war.

stant's picture

And Austria has no fuel for its army.

Bingo Hammer's picture


Fraud, conspiracy, corruption in all directions as far as the eye can see.

Madmen across the globe are in control of the "ship" everywhere and all of them are hell bent it seems to be the first to go over the cliff 

i_call_you_my_base's picture

Depends on your definition of "madmen." From my perspective, they are sane, it's just that the only thing they care about is money. They're greedy fucking assholes, willing to do anything to line their pockets. Using the word "madmen" is too kind. It supposes that they aren't lucid. They know exactly what they're doing and why.

Bingo Hammer's picture

Perhaps i should have written it as "" ...and sorry but money as the core reason is overly simplistic and is only part of it, the sociopaths and psychopaths see this world and get their kicks in very different and a multiplicity of sick and perverted ways  

i_call_you_my_base's picture

Money / power, power / money, there isn't much difference. But I think we can agree that they should all be hung.

Boomberg's picture

With the US pre-occupied with not having 5,000 Americans in Baghdad beheaded and mutilated in HD video on Youtube, now would be a good time for Putin to annex Ukraine. Just do it. 

Volkodav's picture

I think not so concerned...good way for more arms into syria..

where is intelligence services to find where all the new toyota trucks come from?

Racer's picture

Got to get a war going somewhere.....

they are finding it difficult lately, normally it is just saying WMD go gettum, but these days the US bully is having a bit more of a problem

Smegley Wanxalot's picture

Gazprom:  "Oh yeah, and repair our embassy in Kiev at your cost, you Uke assholes."