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Ukraine settles gas debt to Russia

Second tranche of $1.65 billion delivered to Gazprom.

By Daniel J. Graeber

KIEV, Ukraine, Dec. 24 (UPI) -- A Ukrainian energy company has settled its debt to Russian energy company Gazprom according to terms of an October agreement, the government said Wednesday.

"Naftogaz Ukrainy has transferred $1.65 billion to Gazprom as payment for the gas that was earlier delivered and not paid for," the government in Kiev said in a statement.

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

The first installment of $1.45 billion was transferred Nov. 4.

Political upheaval that saw Kiev move closer to the European Union in late 2013 left a weakened Ukrainian economy in shambles. Gazprom cut gas supplies to Ukraine briefly in mid-2014 in response to unsettled debt.

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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Russian Energy Minister Alexander Novak said this week there are no talks under way to consider gas deliveries through Ukraine beyond 2019.

"We believe that up until 2019, the current contract will be in force," he said.

Beate Raabe, a natural gas director for the European Union, said Ukraine is still a vital part of the energy security chain.

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