Russia has raised the price Ukraine must pay for its natural gas supplies for the second time this week, increasing them 80 percent since Monday.
On Tuesday, the state-owned gas company Gazprom announced it was ending Ukraine’s natural gas discount. This raised the price Ukraine paid for Russian gas from about $268 per thousand cubic meters to about $385 per thousand cubic meters. On Thursday, Gazprom announced another price hike, from $385 to $485 per thousand cubic meters.
Gazprom says the price hikes were due to Ukraine’s $2.2 billion energy debt it had built up with the company. But Ukraine’s Energy Minister Yuri Prodan said the price increases were politically motivated, reports Reuters.
“The Ukrainian economy should not pay such a price for gas. It is a political price,” Prodan told reporters, calling for talks with Gazprom.
Ukraine’s whopping energy debt earned them their first price increase, according to Gazprom. But the price increase announced on Thursday was said to be a $100 per thousand cubic meter “export duty on gas sales to Ukraine,” according to Reuters.
The Kremlin-funded Russia Toda says that this was part of a decision by the company — backed by the Russian government — to end “duty-free” gas exports to Ukraine.
“We’ll hope that in the near future Ukraine will start paying its debts and current supplies, though we see that the situation isn’t improving, but only getting worse,” Gazprom CEO Alexei Miller in a meeting with government officials.
“You should be guided by the commonly set export duty rates for gas without applying any discounts and preferences,” Russia’s Prime Minister Dmitry Medvedev told Miller, adding that the company should slap tariffs on gas for all exported gas.
Tariffs on all exported gas could be used as a political tool to keep Europe out of Russia’s way in its territorial ambitions. European and U.S. leaders opposed Russia’s invasion of Ukraine and have punished the country through targeted sanctions.
Europe gets about one-third of its natural gas from Russia, a substantial amount of which flows through Ukraine. Slapping all exported gas with tariffs would raise costs for Europeans who already pay a high price for gas.
Such fears that Russia would use its energy exports to keep Europe in line have sparked calls to send U.S. natural gas and oil abroad to help the country’s allies.
“We can supplant Russia’s influence, but we won’t so long as we have to contend with the Energy Department’s achingly slow approval process,” House Majority Leader Rep. John Boehner, an Ohio Republican, said on the House floor last month.
Republicans have criticized the White House for moving slowly to approve liquefied natural gas export terminals, which could be used to wean Europe off of Russian gas in the long-run.
“This amounts to a de facto ban only emboldens Vladimir Putin, allowing him to sell large quantities of natural gas to our allies,” Boehner said. “The President should do the right thing here, and end this de facto ban so we can strengthen our economy here and our security here and abroad.”
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