GAS: UKRAINE CAN PAY $3.1 BLN

Ukraine's national gas company Naftogaz is ready to settle its outstanding debts for Russian natural gas imports if Gazprom signs a deal guaranteeing winter supplies.

Russia halted gas supplies to Ukraine in June over unpaid bills, saying state-owned Naftogaz owes it around $5 billion. It has said it won't turn on the taps again without settlement of $3.1 billion of the debt this year and prepayment for deliveries of gas for November and December.

Ukraine has said Moscow had set an unfairly high gas price to punish its pro-western government and has disputed the amount that Russian state-gas company Gazprom says it owes.

But Naftogaz Chief Executive Andriy Kobolev said on Friday his company does have the funds to secure a deal to end the stand-off.

"We have $3.1 billion in a special escrow account set aside since July," Mr. Kobolev said in an interview. "So it's not a question of whether the money is there, it's a question of whether Gazprom wants to have a deal."

Gazprom declined to comment.

Reaching a deal is also important for the European Union, which relies on Russia for around a third of its gas, around half of which flows across Ukraine. The EU is worried about gas shortages this winter if Russian supplies to Ukraine don't restart.

The dispute was triggered after Russia nearly doubled Ukraine's gas price in April following the ouster of Ukraine's pro-Kremlin government.

Similar disputes over pricing in 2006 and 2009 led to winter gas shortages in Ukraine and several countries in Europe.

Earlier this week, Russian Energy Minister Alexander Novak said Moscow needed assurances on how Ukraine would pay for its gas. His comments came after Russia and Ukraine failed to conclude an interim deal on gas supplies for this winter in EU-brokered talks in Brussels.

A further meeting is scheduled for next week.

Mr. Kobolev said that if an agreement couldn't be reached with Gazprom it would have to rely on domestic production, gas in storage and so-called reverse gas flows pumped in from neighboring Slovakia.

Ukraine needs around 30 billion cubic meters of gas for the winter period between October and March. Domestic production amounts to 20 bcm a year and storage stands at 16.7 bcm, Mr. Kovolev said.

"To cover the deficit we will need to double the reverse flow we are getting," he said. Slovakia is currently pumping around 1 bcm a year of gas it receives via alternative routes back into Ukraine.

wsj.com