STOCK MARKET WATCH -- Friday, 11 July 2014

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35. Gazprom Stuck With Record Tax Bill After Ukraine Defaults

http://www.bloomberg.com/news/2014-07-11/gazprom-stuck-with-1-8-billion-tax-bill-after-ukraine-defaults.html

OAO Gazprom, Russia’s biggest company, was stuck with record export duty payments in May as Ukraine imported more gas without paying for it.

Gazprom paid 61.9 billion rubles ($1.8 billion) on all its exports, data on the Treasury’s website show, almost 60 percent more than the same month in 2013. Most of the surplus stemmed from deliveries to NAK Naftogaz Ukrainy, a government official said, asking not to be identified because the information isn’t public.

Ukraine imported more gas in May to fill storage tanks as Russia raised prices in the wake of President Vladimir Putin’s decision to annex Crimea. Ukraine refused to pay for the gas, so the company had to find the tax from its own resources. Gazprom halted supplies to Naftogaz in June.

“Ukraine taxes cut Gazprom cash flow,” Ildar Davletshin, an oil and gas analyst at Renaissance Capital in Moscow, said in an interview. “The company had to pay them despite Ukraine non-payment.”