Business | Oil & Gas

Ukraine gets respite from Russiaon gas prices for this winter

Ukraine won assurances from Russia yesterday that there would be no sharp hike in prices for its natural gas this winter, but there was no word of any agreement on prices beyond that.

  • Reuters
  • Published: 00:00 August 17, 2006
  • Gulf News

Moscow: Ukraine won assurances from Russia yesterday that there would be no sharp hike in prices for its natural gas this winter, but there was no word of any agreement on prices beyond that.

Ukraine pays $95 per 1,000 cubic metres of gas but Russian gas giant Gazprom has said that could go up to $230 next year. A row over a previous hike in January briefly disrupted gas supplies to Western Europe via Ukraine.

Gas prices were the main subject of discussion when new Ukrainian Prime Minister Viktor Yanukovich met his Russian counterpart, Mikhail Fradkov, at the Russian Black Sea resort of Sochi, officials said.

Pro-Moscow Yanukovich, humiliated in Ukraine's 2004 "Orange Revolution" and dramatically returned to power two weeks ago, was making his first foreign trip since his appointment.

"We have roughly determined the price parameters to the end of 2006 and into 2007," said Yanukovich in comments broadcast by NTV television station.

"I am not prepared to say more than that, except that the prices will of course be market prices ... and they will correspond to the level of economic cooperation between Ukraine and Russia."

Fradkov said gas prices for the winter would be "based on the agreements we reached in January" suggesting they would stay around the $95 level agreed at that time.

Analysts say if gas prices reach $230 per 1,000 cubic metres it could have a crippling effect on Ukraine's economy, which is driven by an energy-hungry heavy industry.

Gazprom's customers in Europe are watching negotiations closely because they are anxious to avoid a repeat of the January row.

Until then, Ukraine paid $50 per 1,000 cubic metres. When it balked, Gazprom switched off supplies.

That had a knock-on effect on supplies to customers further West as the pipelines supplying them pass through Ukraine.

Analysts said though that friendly relations with the Kremlin were unlikely to win him preferential terms from Gazprom's hard-headed managers.

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