Yanukovych: Expects 'fair' gas price

Oct. 24, 2012 at 6:30 AM
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MOSCOW, Oct. 24 (UPI) -- Ukraine expects to eventually negotiate a "fair" price for its imports of Russian natural gas, Ukrainian President Viktor Yanukovych said this week.

Yanukovych expressed optimism after a meeting with Russian President Vladimir Putin that his country's long-standing efforts to renegotiate its gas contract with Russian gas monopoly Gazprom would bear fruit.

"Negotiations on the gas issue are in progress and we expect to get a fair formula of gas pricing for Ukraine," Yanukovych said after the meeting with Putin at his state residence in Moscow.

Ukraine has been paying around $430 per 1,000 cubic meters of gas under a 10-year agreement signed in 2009 by former Prime Minister Yulia Tymoshenko, for which she was charged with abusing her authority and sentenced to seven years in prison.

Kiev insists the price is too high. Current Prime Minister Mykola Azarov has said his country would reduce imports of Russian gas from 52 billion cubic meters to 27 bcm in 2012 but Gazprom has insisted its "take-or-pay" supply contract is valid.

Under that deal, Ukraine cannot decline delivery of any more that 20 percent of the contracted 52 billion cubic meters without paying for it.

The two leaders said their Monday meeting mostly centered on energy issues and building closer bilateral ties. Annual trade between the countries has reached $50 billion and the pair said they are looking for ways to increase it.

"In the light of the expansion of our interregional cooperation, the successful holding of the (Nov. 1) Ukraine-Russia interregional economic forum in Nizhny Novgorod is extremely important," Yanukovych said.

"I'd like to emphasize our mutual desire to maintain high dynamics of political dialogue, particularly at the highest level," Putin added, indicating a schedule for bilateral meetings will be determined after Sunday's Ukrainian parliamentary elections.

Azarov said this month Russia is offering to reduce the gas price from $430 to $160 per 1,000 cubic meters if it joins the Customs Union of Belarus, Russia and Kazakhstan.

While such a move would hold obvious economic benefits for Ukraine, it would clash with its hopes of negotiating a "deep free trade agreement" with the European Union.

The prime minister said Ukraine doesn't want to have to choose between the Customs Union and a free trade area with the European Union but would rather work with all sides, Interfax reported.

Azarov -- chairman of the pro-Russia Party of Regions -- also said last week he was confident the disagreement over the "terrible" gas prices it is paying would never result in Russia and Ukraine becoming "enemies."

"We support good neighborly relations with Russia," he told Interfax. "We will never allow ourselves to make Russia our enemy, as the Orange [led by Tymoshenko] did.

"But in this case, due to the high price of Russian gas, we have to take measures for the development of our own energy base," he said, predicting that within 10 years Ukraine would be able to meet all of its own demand for gas and oil.

"We cannot buy gas at such a price. The price is terrible for our economy ... Such gas prices slow down our economic development and destabilize our economy," Azarov said.

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