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Naftogaz-Gazprom merger way to cheap gas

July 1, 2011 at 9:08 AM

MOSCOW, July 1 (UPI) -- Gazprom would consider revising the gas price formula for Ukraine only after state utility company Naftogaz agrees to a merger, Gazprom's chief executive said.

Russian gas monopoly Gazprom in 2009 cut gas supplies to Ukraine because of debt and contract issues. Kiev managed to broker a gas deal with stiff terms, and the government has since lobbied for a better deal with the Russian company.

Kiev said the current price mechanism is unfair. Opposition leader and former Prime Minister Yulia Tymoshenko and Oleg Dubina, the former head of national energy company Naftogaz, have faced questioning by Ukrainian authorities in a case involving the deal with Gazprom, which she helped broker.

Alexei Miller, chief executive officer at Gazprom, said his company would consider revising the deal if Naftogaz agrees to a merger, Russia's state-run news agency RIA Novosti reports.

"We can meet our Ukrainian colleagues halfway, but only with the understanding that it will be one company," he was quoted as saying.

Opponents of the merger in Kiev complain it would move the country too close to its former patrons in the Kremlin.

Ukraine transits 80 percent of all Russian natural gas bound for European consumers through its Soviet-era pipeline network.

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