Ukraine has halted gas purchases from Russia as of the beginning of July after the two countries failed to agree in a meeting between Russia and the European Commission on gas prices on Tuesday.
The gas talks between energy officials from the three parties ended without an agreement on the prices for the next quarter of 2015.
After the talks were over, Ukraine’s Naftogaz released a statement saying “as of June 30, 2015, the agreement between Naftogaz and Gazprom runs out, and conditions for continued supply of Russian gas to Ukraine have not been agreed upon; Naftogaz will no longer be purchasing gas from the Russian company.”
“The transit of Russian gas through Ukrainian territory to Gazprom’s European clients will continue in full, according to contracts agreed,” the statement read, reassuring European customers, as nearly 40 percent of European gas has been supplied by Russia.
Ukrainian energy minister Volodymyr Demchyshyn said that Ukraine is set to buy gas from other countries such as Slovakia and Hungary.
As a response, Russia’s energy minister Alexander Novak said that they will not “correct” the gas prices and Ukraine’s decision has no economic basis, it was more “politically motivated.”
"The Ukrainian side said it was not satisfied with the price discount being offered by the Russian Federation," Novak told Russian RIA Novosti news agency.
“The price of $247 [per cubic meter of gas] is completely uncompetitive, that is why we are very surprised that Ukraine wants a much lower price – it is out of line with the current market environment.” He also stressed that the price “is not subject to correction.”
Novak added that Russia will not stop directing supplies of gas to Ukraine’s southeast.
Vice president of the European Commission Maros Sefcovic said “as the meeting has shown today, the parties are still far apart.”
“We have agreed that the Commission will put forward ideas to prepare next steps so that the next consultation could take place. We will use the summer to start preparing the next winter season," Sefcovic added.
The European Commission has been mediating the gas price talks between Ukraine and Russia since March 2015.
Gas price wars between Russia and Ukraine
Gas price disputes have troubled relations between the two countries for a long time. Ukraine purchases nearly 30 billion cubic meters of gas from Russia annually.
Russia previously cut gas supplies in 2006 and then again in 2009.
Because the Russian gas supplier Gazprom sets different prices for each country, it increased the gas prices step by step after February 2014, following former pro-Russian president Viktor Yanukovych’s toppling from the Ukrainian presidency.
Although Russia rejects claims that it is using gas prices as a tool in diplomacy, EU officials have criticised Gazprom for increasing gas prices whenever Russia disputes with them.