Business News Europe: Fresh gas row brewing as Ukraine threatens to cut Russian imports

A fresh gas row between Ukraine and Russia is brewing following an announcement by Kyiv on November 26 that it may cut imports to 18bn cubic metres (cm) in 2013, while also claiming it has created a consortium to build a liquified natural gas (LNG) terminal. Moscow was quick to counter that it could levy $2bn-3bn in fines for breach of contract should Ukraine follow through with its threat to reduce imports. 

Gazprom's long-term contract with Ukraine's Naftogaz contains a take-or-pay provision that applies to 80% of the contracted volume per year. That means Ukraine must pay for at least 41.6bn cm of gas this year (based on a contracted volume of 52bn cm), even if it takes less. However, Ukraine has said that, due to high prices, it's aiming to slash gas imports to just 27bn cm, possibly as early as next year. Russia's position is that the contracted volume is already fixed and that no alterations can take place within six months of the contracted delivery date.  MORE