BYuT UKRAINE
GOVERNMENT PORTAL
INFORM NEWSLETTER
Gas price formula reached
28 July 2008
Published in
Inform
issue #80
See the full issue here.
Last week, Prime Minister Yulia Tymoshenko announced that a way forward had been reached with Gazprom on a formula to determine the price of imported natural gas for 2009. The announcement came after talks in Kyiv with Alexei Miller, CEO of Gazprom and Oleh Dubyna, head of Naftohaz Ukrainy. The final price for gas in 2009 is expected to be announced after Russia’s state-owned gas company completes talks with Turkmenistan, Uzbekistan and Kazakhstan.
The Ukrainian premier declared, “We have found an approach for pricing for next year. We have agreed on a formula for setting the price and found a compromise.”
According to Interfax, Mr Miller credited Ukraine with maintaining “very constructive” contacts with Gazprom and said that the two countries had been able to solve, what were deemed recently, “quite difficult” problems.
The news was warmly received in the west as it should avert any repeat of the gas dispute of 2006 which disrupted gas supplies to Western Europe. More than a quarter of the gas supplied to the EU comes from Gazprom, of which about 80 percent is transported via
Ukraine’s pipeline network. And the amount flowing to Europe is increasing. In the first six months of this year, Ukraine transported 65.3 billion cubic metres of natural gas to Europe, up 23 percent year-on-year.
See the full issue here.
Last week, Prime Minister Yulia Tymoshenko announced that a way forward had been reached with Gazprom on a formula to determine the price of imported natural gas for 2009. The announcement came after talks in Kyiv with Alexei Miller, CEO of Gazprom and Oleh Dubyna, head of Naftohaz Ukrainy. The final price for gas in 2009 is expected to be announced after Russia’s state-owned gas company completes talks with Turkmenistan, Uzbekistan and Kazakhstan.
The Ukrainian premier declared, “We have found an approach for pricing for next year. We have agreed on a formula for setting the price and found a compromise.”
According to Interfax, Mr Miller credited Ukraine with maintaining “very constructive” contacts with Gazprom and said that the two countries had been able to solve, what were deemed recently, “quite difficult” problems.
The news was warmly received in the west as it should avert any repeat of the gas dispute of 2006 which disrupted gas supplies to Western Europe. More than a quarter of the gas supplied to the EU comes from Gazprom, of which about 80 percent is transported via
Ukraine’s pipeline network. And the amount flowing to Europe is increasing. In the first six months of this year, Ukraine transported 65.3 billion cubic metres of natural gas to Europe, up 23 percent year-on-year.
The agreement of a gas price formula for 2009 bodes
well for gradually increasing prices over a number of
years, so as to bring Ukraine in line with market
prices.
“I can assure you that Russia will phase in new gas prices for Ukraine within the next several years. There won’t be any surprise hikes and stress situations,” said Ms Tymoshenko.
Ukraine currently pays $179.50 per thousand cubic metres of natural gas. In June, Gazprom suggested that this could rise to more than $400 per thousand cubic metres in 2009 if Central Asian gas producers pressed ahead with further prices increases.
Turkmenistan raised its price for gas to Gazprom to $130 per thousand cubic metres in the first half of this year and $150 in the second half, up from $100 in 2007.
“We recognise that we will have to transition to higher gas prices,” said Yuriy Prodan, Minister for Fuel and Energy, “the issue is all about timing.”
In any event, Ukraine has been taking precautions to ensure that it has adequate gas supplies to last the winter. “We have so far pumped 8 billion cubic metres into our storage facilities. If all the agreements available come into effect, we could finally pump 14.5-15 billion cubic metres,” said Prime Minister Tymoshenko.
Ukraine has extensive underground storage facilities with a capacity of 32.5 billion cubic metres. Its annual consumption of gas is approximately 75 billion cubic metres, of which 55 billion cubic metres come from Central Asian states.
Some experts believe that Russia will not be ready to disclose a gas price for 2009 until after the December NATO Summit – the meeting which is likely to determine if Ukraine joins the NATO Membership Action Plan.
Meanwhile the government has reiterated its desire for a long-term contract with Gazprom without any intermediaries involved.
“I can assure you that Russia will phase in new gas prices for Ukraine within the next several years. There won’t be any surprise hikes and stress situations,” said Ms Tymoshenko.
Ukraine currently pays $179.50 per thousand cubic metres of natural gas. In June, Gazprom suggested that this could rise to more than $400 per thousand cubic metres in 2009 if Central Asian gas producers pressed ahead with further prices increases.
Turkmenistan raised its price for gas to Gazprom to $130 per thousand cubic metres in the first half of this year and $150 in the second half, up from $100 in 2007.
“We recognise that we will have to transition to higher gas prices,” said Yuriy Prodan, Minister for Fuel and Energy, “the issue is all about timing.”
In any event, Ukraine has been taking precautions to ensure that it has adequate gas supplies to last the winter. “We have so far pumped 8 billion cubic metres into our storage facilities. If all the agreements available come into effect, we could finally pump 14.5-15 billion cubic metres,” said Prime Minister Tymoshenko.
Ukraine has extensive underground storage facilities with a capacity of 32.5 billion cubic metres. Its annual consumption of gas is approximately 75 billion cubic metres, of which 55 billion cubic metres come from Central Asian states.
Some experts believe that Russia will not be ready to disclose a gas price for 2009 until after the December NATO Summit – the meeting which is likely to determine if Ukraine joins the NATO Membership Action Plan.
Meanwhile the government has reiterated its desire for a long-term contract with Gazprom without any intermediaries involved.