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Ukraine hopes to reach fair pricing formula for gas

October 22, 2012, 20:16 UTC+3

The average annual price will be 415.77 U.S. dollars per 1,000 cubic metres

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NOVO OGAREVO, October 22 (Itar-Tass) —— Ukraine hopes to reach a justified and fair pricing formula for natural gas supplies from Russia, Ukrainian President Viktor Yanukovich said.

“The gas talks are underway and we hope to reach a justified and fair pricing formula,” he said after talks with President Vladimir Putin in Moscow on Monday, October 22.

Ukrainian Prime Minister Nikolai Azarov said last week that Russia’s position on a revision of gas contracts had not changed. “Russia's argument is very simple. The 2009 agreement was signed for a period of ten years. Everything has been agreed on - the price of gas, the price of transit, and supplies. We have slashed gas consumption by half - this is our response to partners,” Azarov said.

According to official statistics, Ukraine reduced the import of Russian natural gas to 7.934 billion U.S. dollars in the first seven months of this year, a decrease of 7.7 percent from the same period of 2011.

The Ukrainian leadership earlier announced plans to reduce gas import to 27 billion U.S. dollars a year. In reply, Gazprom urged Ukraine to stick to the effective gas contract.

“We will halve gas consumption next year. We have already started drilling in offshore fields this year and we have signed an agreement with leading energy companies,” he said earlier.

“We are moving over to the policy of energy independence and energy efficiency,” the prime minister said.

He stressed that Ukraine will use less and less imported gas. “We must step up our own gas production and increase the share of coal in the energy balance, reduce energy intensity in industry and the housing sector to the European level,” he said.

At the same time, he confirmed that the government would continue gas talks with Russia.

“We will certainly continue the talks with our Russian partners on the annulment of the enslaving agreement, but the focus will be on our own potential and new technologies,” Azarov said.

Ukraine continues to insist on a revision of the gas agreements with Russia. The country “paid and pays an outrageous price for gas”, which “kills the Ukrainian economy”, Ukrainian President Viktor Yanukovich said.

According to Azarov, “a fair gas price for Ukraine would be about 200 U.S. dollars per 1,000 cubic metres of Russian gas”.

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.

In 2010, Ukraine bought gas the average annual price of 337 U.S. dollars per 1,000 cubic metres.

In the first quarter of 2012, the price of Russian gas for Ukraine is 416 U.S. dollars per 1,000 cubic metres and will be 418 U.S. dollars in the second and third quarters of the year and 413 U.S. dollars in the fourth quarter.

The average annual price will be 415.77 U.S. dollars per 1,000 cubic metres. The Ukrainian budget is based on the gas price of 416 U.S. dollars.


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