Ukraine, Russia Make Progress in Gas Talks

KIEV, February 22 (RIA Novosti) – Ukraine has made “significant” progress in reviewing its gas contracts with Russia, but no final agreements have been signed so far, Ukrainian President Viktor Yanukovych said on Friday.

“We did not stop talks with our Russian partners. And today we have made significant progress in these talks, but no final decision has been made so far,” the president said in a televised interview. 

“We have a plan, and we are working according to this plan. We are still hoping to reach a compromise, allowing us to lower the price of Russian gas.”

Ukraine has been trying to review the gas agreements with Russia signed in 2009 by then-Premier Yulia Tymoshenko, who was later found guilty of abusing her power by signing the disadvantageous deal.

The deal ties the price of gas to that of oil, which has risen sharply since 2009, boosting Ukraine’s gas bill. Kiev insists the price and volume of its gas imports should be reduced.

Ukrainian energy company Naftogaz Ukraina has repeatedly informed Russian energy giant Gazprom that it would reduce the amount of gas it buys from Russia to 27 billion cubic meters a year. That amount is just over half of what Ukraine is obligated to buy under the terms of the 2009 gas deal.

Ukrainian Energy and Coal Industry Minister Eduard Stavitsky said earlier this month that Gazprom billed Ukraine for $7 billion worth of gas the country did not use in 2012, but Kiev rejected the bill as “unjustified.” Gazprom never confirmed the $7 billion bill.

“We refused to pay those punitive fines, and we are now negotiating on the issue,” Yanukovych confirmed.

The president also dismissed reports of possible gas price hikes for individual consumers and businesses, which are needed to secure a loan from the International Monetary Fund.

“We will fight for being competitive, we won’t push our domestic manufacturers into production costs that will [make their products] unprofitable,” the Ukrainian leader said.

This pledge may complicate Ukraine’s negotiations with the fund about a new loan. Under the previous agreement, which expired in December 2012, Kiev received two tranches totaling $3.4 billion from the IMF.

Ukraine, which faces a second year of near-zero economic growth, has sought a new loan, but the IMF said the country must raise the current, heavily-subsidized gas prices as a precondition.


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