Ukraine rules out Naftogaz-Gazprom merger for lower gas price

Ukraine’s president said on Saturday that the national energy company Naftogaz would never merge with Russian gas giant Gazprom for the sake of lower gas prices.

“This issue is not being considered,” Yanukovych said on the sidelines of a summit of the leaders of former Soviet republics in Tajikistan.

Ukraine has said the gas price of $354 per 1,000 cubic meters as counted for the third quarter of 2011 is too high and should be reduced to $200.

Gazprom has set a merger with Naftogaz as a precondition for lower gas prices. On Thursday, Ukrainian Prime Minister Mykola Azarov said Naftogaz would be scrapped and the 2009 gas deals with Russia revised.

Russian premier’s spokesman Dmitry Peskov has responded that the gas deals cannot be revised and Naftogaz’s successor would have to meet the previous commitments.

Ukraine has threatened to cut gas imports from Gazprom to 27 billion cubic meters from next year, but Gazprom said Ukraine had to pay for a minimum of 33 billion cubic meters under the 2009 contracts regardless of how much it imports.

Ukraine, which is Russia’s main energy transit route to Europe, has been looking to diversify its energy imports and reduce dependence on Russian supplies.

On Thursday, Royal Dutch Shell and Ukrainian state-run gas company Ukrgasvydobuvannya signed a deal to explore tight gas fields in Ukraine.

Shell Chief Executive Peter Voser said the company would invest $200 million in probing and $600 million in exploration.

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