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Ukraine pays first debt installment to Gazprom

Payment part of interim solution to lingering gas crisis.

By Daniel J. Graeber
Gazprom confirms first payment of debt from Ukraine under the terms of an interim deal. (UPI/Shutterstock/Igor Golovniov)
Gazprom confirms first payment of debt from Ukraine under the terms of an interim deal. (UPI/Shutterstock/Igor Golovniov)

MOSCOW, Nov. 5 (UPI) -- Russian energy company Gazprom said Wednesday it received the first installment of the debt owed by its Ukrainian counterparts at Naftogaz.

"Gazprom received from banks confirmation of the transfer of funds from Naftogaz of Ukraine to the amount of $1.45 billion as a partial repayment of debt for earlier supplied gas," the company said.

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The Ukrainian government under the terms of a deal brokered last week with the help of European negotiators agreed to pay its $3.1 billion debt in installments. In return, Russian delivers gas under a pre-payment mechanism that extends through March.

The interim contract frees Ukraine from a take-or-pay clause, which would've obligated it to pay for set volumes of natural gas regardless of usage. Gas is also delivered to Ukraine at a discounted rate.

A report in the Ukrainian News Agency said the government in Kiev is working to minimize the amount of natural gas it purchases from Gazprom until it gets the discounted rate.

Political upheaval that saw Kiev move closer to the European Union in November left a weakened Ukrainian economy in shambles. Gazprom cut gas supplies to Ukraine in mid-2014 in response to unsettled debt.

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Similar rows in 2006 and 2009 left downstream consumers in Europe without gas supplies for part of the winter season. Europe gets about a quarter of its gas needs met by Russia, though most of that runs through the Soviet-era gas transit network in Ukraine.

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