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Wrap: Russia-Ukraine natural gas dispute settled

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MOSCOW, January 4 (RIA Novosti) - Russian energy giant Gazprom and Ukraine's national natural gas company Naftogaz have come to terms on the supplies of Russian natural gas to Ukraine, the companies' heads said Wednesday.

Gazprom CEO Alexei Miller and head of Naftogaz Alexei Ivchenko told a news conference they had signed a contract for five years, which set the price for Russian natural gas supplies to Ukraine at the basic price of $230 per 1,000 cubic meters and at $1.6 for the transit of 1,000 cu m of gas via each 100km of Ukraine's territory.

Miller said transit would be paid for in money, and its cost was in no way connected with the price of gas delivered to Ukraine. He said Gazprom was "satisfied with the achieved results."

Ivchenko also said Naftogaz was satisfied with the results of the talks.

"We are satisfied with the results of the talks, we have come to terms on a mutually acceptable basis, which allows us to ensure Ukraine's balance of gas in full and ensure transit of Russian natural gas to Europe," Ivchenko said.

"We will buy Turkmen gas from RosUkrEnergo on the border of Russia and Ukraine at $95 per 1,000 cu m," the head of Naftogaz said.

The high price of Russian natural gas sold to RosUkrEnergo, a company transporting Turkmen gas to Ukraine, will be compensated for by cheaper gas supplies from Central Asia, a Gazprom spokesman said Wednesday.

Gazprom press secretary Sergei Kupriyanov said RosUkrEnergo would buy Russian natural gas at $230 per 1,000 cubic meters, which would be mixed with gas supplied from Central Asia, making the price for Ukraine $95 per 1,000 cu m at the first stage.

RosUkrEnergo is a joint venture of Gazprombank, a subsidiary of Russian energy giant Gazprom, and Raiffeisen Bank, which own 50% in the company each.

"The price of Russian natural gas supplies to RosUkrEnergo is determined by a formula similar to that applied for European consumers," Gazprom's press secretary Sergei Kupriyanov said.

Kupriyanov added that the price would be adjusted automatically more often than once a year. He said the contracts had been signed from January 1, which means all problems related to gas tapping in the first days of January have been resolved as well.

The cost of transit has been raised from $1.09 to $1.6 per 1,000 cu m of natural gas per 100km, Naftogaz head Ivchenko said. "Thus, our companies are switching to market relations, which allows us to meet their demands," he added.

The Ukrainian Prime Minister's press secretary Valentin Mondriyevskiy said earlier that in 2006 Ukraine would have 76.5 billion cubic meters of natural gas on its balance, including 40 billion cu m from Turkmenistan, 16.5 billion cu m from Russia and 20 billion cu m of own production.

European Union Commissioner for Energy Andris Piebalgs hailed Russia and Ukraine coming to terms on natural gas supplies at a meeting of an EU gas coordination group in Brussels Wednesday.

Piebalgs said he was glad that the countries had reached a mutually acceptable agreement.

The State Duma, the Russian parliament's lower house, positively assessed the compromise that Russia and Ukraine had reached in a natural gas conflict.

"This is the triumph of common sense, a major political compromise in the interests of Russia, Ukraine and our European partners," State Duma Deputy Speaker Oleg Morozov said.

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