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. Last Updated: 07/27/2016

Turkmen May Halt Gas to Kiev

ASHGABAT, Turkmenistan -- Turkmenistan will cut all gas supplies to Ukraine, its biggest single customer, from Feb. 21 if Kiev continues to default on payments, a senior Turkmen official said Thursday.


Deputy Prime Minister Valery Otchertsov said the ultimatum, signed by himself, was sent to the Ukrainian government on Wednesday. He added that bad debts were severely weakening this Central Asian nation's economy.


Otchertsov said Ukraine has not paid anything for Turkmen gas shipped this year despite a January agreement that it would pay every 10 days at a rate of $50 per 1,000 cubic meters.


"If they do not pay by Feb. 21 we will cut off all gas supplies," Otchertsov said by telephone.


Turkmenistan agreed in January to ship 28 billion cubic meters of gas to Ukraine this year, despite the fact that Kiev remains $693.2 million in debt for 25 billion cubic meters piped in 1993.


Kiev agreed to repay this $693.2 million in eight quarterly installments this year and in 1995 at an interest rate of libor plus two. The deadline for its first quarterly repayment has not yet arrived.


A senior Turkmen official, who declined to be identified, said Kiev was trying to shift part of the debt burden from the government to the mainly state-owned factories that use Turkmen gas.


The official said this solution was not acceptable to Turkmenistan because it would be likely to increase, not decrease, delays in debt settlements.


Turkmenistan's economy is overwhelmingly dependent on revenues from about 80 billion cubic meters of gas that it produces annually.All of Turkmenistan's gas exports move down Soviet-era pipelines through Russia.


Ukraine aside, Turkmenistan is also owed $200 million by Georgia, $21 million by Kazakhstan and $30 million by Uzbekistan for 1993 gas shipments, he said.