Russia has set a deadline to Ukraine, urging the latter to pay its past gas supplies bill until May 31st. The bill will be released on May 16th and Ukraine should pay the bill, which amounts to $3.5 billion. If the payments are not going to be made until the deadline, Russia stated that they will no longer supply Ukraine with gas starting June 1st, which would greatly affect Europe since it gets its gas supplies from Russia as well through Ukraine.
Cutting gas supplies had already been an issue in 2006 and 2009 when Russia cut off gas supplies to Ukraine. Thus, Russia, Ukraine, the European Union and the International Monetary Fund are taking steps on how to prevent such row.
International Monetary Fund Bailing Ukraine Out
The International Monetary Fund is ready to release $3 billion to bail out Ukraine. This means that Ukraine will be able to pay the gas bill, which will result in continuous gas flow to Europe. The organization had approved its two-year bailout on Ukraine, which amounts to $17 billion. The $3 billion that Ukraine needs will be readily released by the International Monetary Fund so that the gas bill will be settled before the deadline.
- Discriminatory Price Hike
Russia had hiked its gas prices it charges to Ukraine by up to 80% to $485.50 per thousand cubic meters last month, which Ukraine claims to be discriminatory since Gazprom only charges European countries $377.50 per thousand cubic meters.
- Sanctions on Russia
The United States and Europe had imposed sanctions on Russia because of its invasion of Crimea’s Ukrainian region. The dispute forced the US to use tougher measures to ensure that the tension will no longer worsen, which would highly affect not only the gas prices but also the economy of Ukraine and Russia, along with European counties. Thus, the International Monetary Fund and the US had to take steps to prevent such row from happening, bailing out Ukraine from the deadline, which would be a few weeks from now.
- Reducing Gas Consumption
Europe is already seeking ways on how to lessen their gas usage to reduce gas imports from Russia. However, gas investments will not be able to earn profits, which can highly affect the economy. Thus, it will be really tough for Ukraine and European countries to reduce gas imports without sacrificing a lot.
Europe was even using more energy during the past year, which increased their gas import by 15%. This indicates that it will be very hard for European countries to manage their gas consumption and import at this rate.
Talks were held in Poland between Russia, Europe and Ukraine to prevent conflicts and gas cuts. All parties are trying to prevent the former gas disputes between Russia and Ukraine from happening again. The gas disputes, which happened on 2006 and 2009, had a great impact on Ukraine and European counties, which is not good for the economy. Thus, all measures are used to prevent disputes and maintain peace to prevent gas cuts from Russia.