Ukraine drafts 2012 budget at current Russian gas deal prices

The Ukrainian government has set the average price for Russian gas in its 2012 draft budget in line with a 2009 contract Kiev is now contesting, First Deputy Prime Minister Andrei Klyuyev told reporters on Wednesday.

“It is calculated to the formula set in the contract by (former prime minister Yulia) Tymoshenko … It will range from $414 to $416 – this is the average price,” Klyuyev said .

The 10-year gas export contract with Russia, signed in 2009, ties the price for gas to oil prices, which have been rising recently boosting Ukraine’s bill. Tymoshenko is now on trial for signing the deal, and Kiev is at pains to revise it.

“We are obliged to fulfill the 2009 contract before we agree new ones. This is why we are calculating the draft budget and all social and economic development programs as if the contract were to be fulfilled and the gas price were high,” Klyuyev said.

He reiterated Ukraine still hoped to revise the existing terms.

Kiev does not rule out going to court to renegotiate the contract, and said it would spin off production, transportation and sales units off national energy company Naftogaz, which holds the Russian gas contract, to break the agreement.

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