Russia imposes prepayment regime with Ukraine on gas supplies

MOSCOW - Russia's energy giant Gazprom decided on Monday to introduce prepayment regime with Ukraine's Naftogaz company, as the latter failed to pay its multi-billion-US dollar gas debt.

"The decision was made because of the chronic nonpayment by Ukraine's Naftogaz. Arrears by the company for Russian gas deliveries stand at 4.458 billion dollars," Gazprom said in a statement, adding 1.451 billion dollars were owed for deliveries between November and December 2013, and 3.007 billion dollars for April-May this year.

The switch took effect at 10:00 am Moscow time (0600 GMT), hours after representatives of Russia, Ukraine and the European Union concluded fruitless overnight talks.

Gazprom said it will supply gas to European consumers in full volume, but warned the European Commission of potential interruption in gas transit through Ukraine.

It also urged the Ukrainian side to abide by the obligations and ensure fluent gas transit, adding the company would file a suit in Stockholm court of arbitration against Naftogaz.

Russian Deputy Prime Minister Arkady Dvorkovich said further action regarding Ukraine's gas debt would be made after Gazprom CEO Alexei Miller's report to President Vladimir Putin.