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Russian gas price for Ukraine depends on Turkmenistan - Gazprom

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Russian gas monopoly Gazprom [RTS: GAZP] said following talks with Ukraine Friday that its natural gas price for the former Soviet republic would not change unless Turkmenistan raised its price.
KIEV/MOSCOW, July 7 (RIA Novosti) - Russian gas monopoly Gazprom [RTS: GAZP] said following talks with Ukraine Friday that its natural gas price for the former Soviet republic would not change unless Turkmenistan raised its price.

Earlier, Gazprom conceded the possibility of raising the price for gas supplied to Ukraine for the second half of 2006.

"If gas from Turkmenistan does not appreciate, there will not be a major price rise in our gas contracts [with Ukraine]," the energy giant said.

Under an agreement that Russia and Ukraine signed on January 4, Ukraine imports a mixture of Russia's and Turkmenistan's natural gas at $95 per 1,000 cubic meters. The price formula is based on a rate of $230 for Russian gas and $60 for the Central Asian republic's gas.

Turkmenistan said late June it would cut off supplies of natural gas to Russia if a new gas deal with a new price of $100 per 1,000 cubic meters was not signed by September.

During talks held last week in the capital of Turkmenistan, the Central Asian state also proposed to Ukraine that a contract be signed on gas supplies from Turkmenistan at $100 per 1,000 cu m as of October. Ukraine insists on supplies of 10-12 billion cu m of Turkmen gas on direct contracts in the second half of 2006 at $60 per 1,000 cu m.

But Ukraine's national Naftogaz oil and gas company said following Friday's meeting between Naftogaz board chairman Oleksandr Bolkisev, Ukrainian Fuel and Energy Minister Ivan Plachkov, and Gazprom CEO Alexei Miller in Moscow that Russia would not raise natural gas prices in 2006.

"After discussing natural gas prices, Ukraine and Russia reiterated that the price for natural gas supplies to Ukraine would not change throughout 2006," Naftogaz's press service said.

Russia and Ukraine also discussed Ukraine's underground gas reserves, according to Naftogaz. The company said the two countries had agreed that Ukraine would find the means of pumping 1.5-2 billion cu m of gas into its underground storage facilities, crucial for ensuring uninterrupted supplies further on to Europe.

Some consumers in Europe reported a decline in Russian gas supplies early in 2006 following a bitter pricing row between Russia and Ukraine, when the former briefly cut off supplies to its former Soviet ally. Russia then accused Ukraine of siphoning off European-bound gas.

Last week, Gazprom said the situation with Ukraine's storage of natural gas remained tense, as Naftogaz's debt to Rosukrenergo, a trader handling Russian and Central Asian natural gas, 50% owned by Gazprom, exceeded $650 million.

The parties agreed to continue talks in Kiev next week to discuss "problems facing the gas industry," the company said.

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