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Price of gas greatest problem in Ukraine-Russia relations - Yanukovich

February 03, 2012, 20:29 UTC+3

“The gas contract concluded three years ago is extremely unfavorable for Ukraine,” he said

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KIEV, February 3 (Itar-Tass) — Ukrainian President Viktor Yanukovich has said that the current price of Russian gas “in the long term threatens the national security of Ukraine.”

“It worsens the position of our producers in the international markets,” Yanukovich told the German newspaper Sueddeutsche Zeitung in an interview. “The gas contract concluded three years ago is extremely unfavorable for Ukraine.”

Yanukovich said that Ukraine’s gas pipeline system required upgrade. Experts estimate the costs at 5-7 million dollars, and the time required for this, at 5-7 years. For doing repairs on the pipelines he suggested creating a “trilateral consortium that would accommodate the interests of Russia and the EU member-states.”

In his opinion, Russia and the EU might own 33-percent stakes, and Ukraine, 34 percent. Yanukovich believes that this would make the system transparent enough. Specifically, he pointed out that the talks on leasing the pipeline system had never been conducted. Ukraine is fundamentally interested in retaining the status of a transit country, because the transit costs are a major source of budget revenues.

Earlier, the deputy chief of the oil and gas industry department at Ukraine’s Energy and Coal Ministry, Konstantin Borodin, said that due to the gas contracts the former prime minister, Yulia Timoshenko, signed in 2009 Ukraine this year, would overspend 6.4 billion dollars.

“The import of natural gas is expected at a level of 27 billion cubic meters at an average price of 416 dollars per 1,000 cubic meters. The expected value of imported gas will reach approximately 11.3 billion dollars. This is 6.4 billion dollars more than Ukraine would have paid at the 2008 price,” Borodin said.

He recalled that Ukraine’s overspending over the three years since the 2009 gas contracts have been in effect have exceeded 9.4 billion dollars. The 2010 accord on a discount off the gas price for Ukraine allowed for saving 7 billion dollars, and in 2012 the discount will be at approximately 2.7 billion dollars.

In the first quarter of this year the price of Russian gas is 416 dollars per 1,000 cubic meters, in the second and third quarters, 418 dollars, and in the fourth quarter, 413 dollars. The average annual price will be 415.7 dollars per 1,000 cubic meters. Ukraine’s 2012 budget is based on a gas price of 416 dollars per 1,000 cubic meters.

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