As Russia’s largest oil and gas company is once again embroiled in an energy dispute with Ukraine, the country’s dependence on hydrocarbon exports tests its government’s commitment to further liberalization.
Ukraine, which is home to more than 8 million ethnic Russians, is tied by contract to pay Gazprom a set amount, no matter how much oil and gas it imports, a so-called “take or pay” policy. However, the government in Kyiv seeks to renegotiate those terms in order to not pay $7 billion worth of unused gas buys, a plea the oil and gas conglomerate rejects.
Alexander Medvedev, Gazprom’s deputy chief executive and head of its export arm, told The Financial Times Feb. 15, “The principle of ‘take or pay’ is that if you don’t want to take it, you still have to pay for it.”
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