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Gas price deal with Ukraine guarantees supplies to EU – Medvedev

Energy Trade

The natural gas price agreement reached with Ukraine will guarantee uninterrupted supplies of Russian gas to Europe in 2008, the board chairman of Russian energy giant Gazprom said on Thursday.

„We are glad that this happened in early December, and not at the beginning of next year, and in this sense all European consumers are now to a much greater extent safeguarded against problems that have occurred in recent years, through no fault of our own,” Dmitry Medvedev, who is also a first deputy prime minister, said. Medvedev told journalists that the price of $179.5 per 1,000 cubic meters is justified. „The price.... is absolutely market-oriented and balanced, and was agreed upon as a result of thorough talks,” he said.

Gazprom signed a contract Wednesday with Ukraine on Russian natural gas supplies for 2008. The $179.5 price, raised 38% from the current $130 per 1,000 cubic meters, was agreed on Tuesday, at a meeting of Gazprom CEO Alexei Miller and acting Ukrainian Fuel and Energy Minister Yuriy Boyko. Gazprom demanded Ukraine pay off its gas debt and threatened to cut supplies on October 2, just a few days after Ukrainian elections. The deal was reached in a week, but it revived memories of a bitter pricing row between Moscow and Kiev in early 2006, which affected gas transits to Europe. Medvedev also said the price of Russian natural gas for Belarus could reach average European levels in 2011. „The gas price for Belarus is among the lowest of CIS states, but it is due to reach the average European level in 2011,” Medvedev said.

Under the 2007 contract, Belarus pays $100 per 1,000 cubic meters of gas, but Gazprom wants to make the country gradually switch to EU pricing levels, which are way higher ($250 per 1,000 cubic meters). (rian.ru)

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