Russia halts gas delivery to Ukraine over pricing disputes

MOSCOW - Russian gas giant Gazprom confirmed on Wednesday that it cut off the gas flow to Ukraine on the grounds that Kiev failed to made an advance payment for July gas deliveries.

Russian Prime Minister Dmitry Medvedev (C), Energy Minister Alexander Novak (L) and chief executive of Russia's top natural gas producer, Gazprom, Alexei Miller attend a meeting in Moscow, Russia, June 29, 2015. [Photo/Agencies]

"Ukraine has not made prepayment for gas deliveries for July. As of 10:00 in the morning of July 1, Gazprom has halted gas deliveries," Gazprom CEO Alexei Miller said.

Meanwhile, Miller offered assurance that the dispute would not disrupt the flow of Russian gas to European countries via Ukrainian territories.

The episode followed the collapse of EU-mediated talks in Vienna, Austria, Tuesday between Russian and Ukrainian energy officials over gas prices.

Russia on Monday gave Kiev a gas price discount of 40 U.S. dollars per 1,000 cubic meters of fuel for the third quarter of 2015, setting the price at 247.18 U.S. dollars per 1,000 cubic meters, the same as in the second quarter.

Ukraine, however, is seeking an 100-dollar discount, claiming that without the discount the gas imported from Russia would be more expensive than fuel purchased in the European market.

"Gazprom has not and will not make any changes to the pricing mechanism for gas supplies to Ukraine until the end of 2019," RIA Novosti news agency quoted Miller as saying. The gas price is determined through a formula set out in the effective contract reached in 2009, Miller added.

Ukraine's national energy firm Naftogaz announced the suspension of gas imports from Russia earlier in the day.