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Ukraine’s rejection to integrate with Europe may bring it Russia’s gas dividends

November 26, 2013, 15:49 UTC+3 World Service) ¶ 26/11 Tass ¶ ¶ Ukraine’s rejection to integrate with Europe may bring it Russia’s gas dividends ¶ ¶ Ukraine has obtained Russia’s consent to reconsider the gas contract it sees as enslaving
Ukrainian President Viktor Yanukovich considers the effective contract with Russia’s gas giant Gazprom disadvantageous
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MOSCOW, November 26. /ITAR-TASS/. Ukraine has obtained Russia’s consent to reconsider the gas contract it sees as enslaving, Ukrainian Prime Minister Nikolai Azarov said.

For several years Ukraine has been seeking reconsideration of the gas contract with Russia that was signed by former prime minister Yulia Timoshenko in 2009 and brought her prison, the Novye Izvestiya daily reports.

Ukrainian President Viktor Yanukovich considers the effective contract with Russia’s gas giant Gazprom disadvantageous. Over this deal Ukraine loses $6 billion a year, he said.

Moscow has repeatedly announced its readiness to offer discounts to its southern neighbor, on which Russia’s gas transit to its strategic consumer - the European Union - depended. However, Ukraine faced unacceptable requirements together with these proposals - control over Ukraine’s gas pipeline network or “an integration discount” in exchange to Ukraine’s accession to the Customs Union of Russia, Belarus and Kazakhstan.

Nevertheless, in autumn Kiev had received such a discount to ensure the loading of fuel into underground gas storage facilities in the winter period. This cost Gazprom $500 million. However, the Russian monopoly had done this not because of “fraternal feelings”, but to ensure non-stop supplies to Europe. It had done this for Ukrainians, who were steadily reducing Russian gas imports not to start siphoning gas from storage facilities to meet own demands, what one day had already waged the Russian-Ukrainian ‘gas war.’

Now when Gazprom had been investing billions into the construction of pipelines bypassing Ukraine a row with Kiev that ensured three fourth of Russian gas exports to Europe would mean the loss of European consumers’ trust. However, the discount’s size remains unclear. Some sources say the price can be cut by half even to $150 per 1,000 cubic meters. This year Ukraine bought the Russian gas at an average price slightly exceeding $420 per 1,000 cubic meters.

“The current gas price of $400 is not so exorbitant as Kiev wants to show. For instance, the current price of Russian gas for the Baltic states totals $492, for Macedonia it is higher, $560, and for Bosnia and Herzegovina - $515 per 1,000 cubic meters,” an investment company analyst, Vasily Yakimkin, said.

On Thursday, Gazprom spokesman Sergei Kupriyanov made comments on possible changes in the gas contract with Ukraine, Novye Izvestiya reported. He said he knew nothing about promises allegedly given by Moscow to the Ukrainian government on this point. Kupriyanov also advised to ask Ukrainian Prime Minister Nikolai Azarov the question about changes in the gas contract.

 

Itar-Tass is not responsible for the material quoted in these press reviews

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