President of Russia Vladimir Putin: Mr Miller, you wanted to report on the work with our close partners in Ukraine.
Gazprom CEO Alexei Miller: Mr President, as of April 1, a new price is in effect for Russian gas supplied to Ukraine: $247.18. This price takes into account the discount provided by the Russian Federation through the customs duty.
Vladimir Putin: By lowering it.
Alexei Miller: By lowering the customs duty. The decision was made for a period of three months, although Ukraine reached out with a request to provide the discount for a longer period.
The decision on the three-month period has to do with the fact that we are currently seeing a great deal of volatility on the gas market. We understand that the current trends on the oil market can change drastically and, in theory, can drop even further. These risks exist, so the decision concerning the discount amount can ultimately only be made in conjunction with the actual price level we will see next quarter. On the other hand, there are risks that the price for gas supplies to Ukraine will be lower than the spot price and significantly lower than the price levels for Ukraine’s neighbours.
Vladimir Putin: Let’s proceed on the basis that you will maintain normal business relations so that our partners can feel confident concerning our intentions. We certainly want them to be confident that we will not use our economic ties as some sort of lever to resolve other issues that are unrelated to the economy. We have never done this in the past, and they should feel confident that we will not do this in the future. So please aim to abide by and strictly adhere to the demands of the 2009 contract.
As for the discounts, we will need to use them in such a way that the price for Ukraine is comparable to the regional prices – meaning, the nations neighbouring Ukraine.
Alexei Miller: Ukraine has also requested that we do not fine them for the “take or pay” conditions stipulated in the 2009 contract. We are accommodating them. We wrote a letter to National Joint Stock Company Naftogaz of Ukraine that Gazprom will not issue fines for the next three months. However, Ukraine is asking to extend the duration for this stipulation.
Currently, we see that the amount of our gas Ukraine is drawing is very low, but this has to do with the drop in industrial production in Ukraine, with an increase in energy prices. For example, last year, the level of supplies was just above 14 billion cubic metres of Russian gas. At the “take or pay” level, it’s 41.6 billion. Of course, this difference is very significant, and we feel that we can support our Ukrainian colleagues’ request to cancel the “take or pay” fines.
Vladimir Putin: I agree. Given the problems of the Ukrainian economy, we must help our partners. And another issue: we must ensure uninterrupted gas supplies to all partners, including in southeast Ukraine.