KIEV, September 5 (Itar-Tass) —— 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.
Ukraine continues to insist on a revision of the gas agreements with Russia.
According to Prime Minister Nikolai Azarov, “a fair gas price for Ukraine would be about 200 U.S. dollars per 1,000 cubic metres of Russian gas”.
“The current gas price is 320 U.S. dollars per 1,000 cubic metres for Poland and 330 U.S. dollars for Germany,” Azarov said. “If the transport component and some other expenses are excluded from this price, a fair gas price for Ukraine, consistent with contracts with Western partners, would be about 200 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.
After a meeting of the Committee on Economic Cooperation of the Russian-Ukrainian Interstate Commission in Sochi on April 30, Russian Prime Minister Vladimir Putin suggested that Gazprom and Naftogaz Ukrainy might merge their assets.
According to Miller, “If an agreement is reached on a merger of Gazprom and Naftogaz Ukrainy, Russia will be able to keep the Ukrainian gas transportation system working at full capacity”.
“This will increase Ukrainian budget revenues and, most importantly, gas will be supplied to Ukraine at domestic Russian prices for both the population and industry, after the relevant agreement has been signed: Ukraine will get a serious stimulus for socio-economic development,” he said.
Earlier, Miller said that Gazprom and Naftogaz Ukrainy were discussing a possible merger of their assets.
At the same time, Miller declined to say whether such consolidation will take place, saying, “Negotiations are still in progress.”
“It is important to say that we have agreed with the Ukrainian side’s view that the process of consolidation should be not just mutually advantageous but also equally advantageous,” Miller said.
He named three key Russian positions. “First, consolidation proposals are consistent with global trends. Second, in the event of consolidation, it will be possible to upgrade Ukraine’s gas transportation system using Gazprom’s financial possibilities. And third, we believe it possible to carryout the process of consolidation stage by stage,” Miller said.
Last year, Russian Prime Minister Vladimir Putin suggested merging capacities of Gazprom and Naftogaz Ukrainy and setting up a joint venture in the gas sphere similar to the one, which is being established by the two countries in the nuclear energy sphere. “We are ready also for integration in the gas sphere,” Putin said.
Several days later, Ukrainian Prime Minister Nikolai Azarov said his country was ready for such merger “on equal terms.”
However Yanukovich said he was against a potential merger of Naftogaz Ukrainy and Russia’s Gazprom.