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Ukraine, Russia fail to reach compromise on gas agreement - TV

December 12, 2011, 22:48 UTC+3
“There will be no New Year presents,” Alexei Miller said
1 pages in this article
Photo ITAR-TASS

Photo ITAR-TASS

KIEV, December 12 (Itar-Tass) —— Ukraine and Russia have failed to come to consensus on the price of gas, Kiev’s Channel 5 said on Monday, December 12, citing Russian Gazprom CEO  Alexei Miller.

“There will be no New Year presents,” the television channel quoted him as saying.

After the talks between Miller and Ukrainian Fuel and Energy Minister Yuri Boiko, “instead of usually optimistic assessments of the Ukrainian-Russian talks, the sides made curt statements that they had discussed questions of cooperation”, the TV channel said.

Earlier, Miller and Boiko met in Moscow on December 5 to discuss “bilateral cooperation and noted the fruitfulness of the current dialogue”.

They “agreed that the talks on the terms of Russian gas supplies to Ukraine can be completed before the end of 2011,” Gazprom said.

Kiev is seeking to revise the gas agreements with Russia made by former Prime Minister Yulia Timoshenko in January 2009.

Naftogaz Ukrainy CEO Yevgeny Bakulin said a fair price for Russian natural gas would be 230 U.S. dollars per 1,000 cubic metres.

“This is quite an objective price,” he told Channel 5 on Monday, September 5.

He recalled that the Russian gas for Ukraine had cost 179.5 U.S. dollars per 1,000 cubic metres in January 2009 when the current agreement with Russia was signed.

Earlier, Ukraine said it would press for cutting the gas price to 240 U.S. dollars per 1,000 cubic metres.

Ukrainian President Viktor Yanukovich said he would like to reach an agreement with Russia on a reduction of the price for Russian natural gas supplies for Ukraine by almost 20 percent to 240 U.S. dollars per 1,000 cubic metres.

On January 19, 2009, Russia and Ukraine made 10-year contracts until 2020 for the transit of Russian natural gas to Europe through Ukraine and for gas supplies to Ukraine on the basis of the European pricing formula. Under these agreements, Russian gas is supplied to Ukraine at a 20 percent discount, while the transit rate remained at the 2008 level of 1.7 U.S. dollars for 1,000 cubic metres per 100 kilometres.

On January 1, 2010, the sides switched to market gas prices. According to Russia's Gazprom, 94.6 billion cubic metres of gas were transported through Ukraine in 2010. The transit rate for the Russian gas in 2010 was 2.7 dollars for 1,000 cubic metres per 100 kilometres on the average. In the first quarter of 2011, it was raised to 2.94 U.S. dollars, and Ukraine started talking about new increases for Russia.

In 2010, Ukraine bought gas the average annual price of 337 U.S. dollars per 1,000 cubic metres. In the first quarter of the year, the price was 305 U.S. dollar per 1,000 cubic metres. On April 21, after talks between Medvedev and Yanukovich in Kharkov, Gazprom and Naftogaz Ukrainy signed an addendum to the agreement on gas supplies and gas transit to Europe of January 19, 2009. The addendum gave Ukraine a discount of 100 U.S. dollars if the price exceeds 330 U.S. dollars per 1,000 cubic metres, or 30 percent of the price.

According to the documents, the discount became effective from April 1, 2010. So, the price of gas for Ukraine was 236 U.S. dollars per 1,000 cubic metres in the second quarter of the year, 248 U.S. dollars in the third quarter, and 250 U.S. dollars in the fourth quarter.

Under the agreement reached on October 27, 2010, the price of Russian gas was about 264 U.S. dollars per 1,000 cubic metres in the first quarter of 2011, 295.6 U.S. dollars in the second quarter and 355 U.S. dollars in the first quarter. The average price of gas for Ukraine in 2011 will be 280 U.S. dollars per 1,000 cubic metres, as was projected.

Ukrainian mass media earlier quoted sources in the government as saying that Kiev and Moscow had agreed to a new price of 220-230 U.S. dollars per 1,000 cubic metres of Russian gas. Sources in the parliament name 270 U.S. dollars.

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