Gazprom gas price hike

Ukraine will now pay a price of $385.5 (279.81 euros) per 1,000 cubic meters of gas, Gazprom CEO Alexei Miller said in a statement on Tuesday.

The new price represents a rise of more than 40 percent against the $268.5 that Ukraine has been paying since December under a discount agreed before the ouster of its Moscow-backed President Viktor Yanukovich and Russia's annexation of the formerly Ukrainian Crimea.

"The discount will no longer apply," Miller's statement said. "This is due to the inability of the Ukrainian side to pay for debts from 2013 and realize full payments for current deliveries."

He added that Ukraine currently owed $1.71 billion to Gazprom.

Russia had agreed to cut the gas price for Ukraine in December after Kyiv pulled out of signing a trade agreement with the European Union and began to undertake steps toward rebuilding economic ties with Moscow instead. The rejection of the EU deal led to months of anti-government protests in Ukraine that led to Yanukovich's ouster in February, which in its turn resulted in Moscow's seizure of Crimea in defiance of the international community.

Longrunning disputes

It is not the first time Russia has used gas prices as a method of exerting pressure on Ukraine, which is reliant on imports from its former Soviet master for over half its gas and oil supplies.

Such energy disputes can also affect the supply to Europe, as in early 2009 when a row between Moscow and Kyiv left much of Central Europe without gas in a freezing winter.

The current crisis has sparked new calls for the EU to reduce its reliance on Russian energy supplies, but any changeover would likely be very gradual.

The price hike was expected, but still deals a blow to the Ukrainian economy, which needs an international rescue to stave off the risk of default.

Ukraine agreed last week to raise domestic gas consumer prices by up to a half to meet a key loan condition from the International Monetary Fund.

Ukrainian Prime Minster Arseny Yatseniuk has said his country will need energy from the EU to protect it from the repercussions of its standoff with Moscow.

tj/mz (Reuters, AFP)