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Gazprom approves strategy to charge market prices for CIS states

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Russian energy giant Gazprom [RTS: GAZP] confirmed Tuesday it will charge market-based prices for natural gas it supplies to former Soviet republics
MOSCOW, December 19 (RIA Novosti) - Russian energy giant Gazprom [RTS: GAZP] confirmed Tuesday it will charge market-based prices for natural gas it supplies to former Soviet republics.

At a meeting earlier in the day, the Gazprom board of directors approved the company's current price policy, and instructed the management to continue its work towards applying market mechanisms for pricing, in gas trade with the Commonwealth of Independent States (CIS), a loose confederation of former Soviet republics.

Gazprom is currently carrying out measures to gradually bring gas prices for CIS states up to the European level, taking into account the distance of deliveries.

CIS countries currently pay not more than $110 per 1,000 cubic meters of gas, compared with an average rate of $230 charged by Gazprom for its exports to Europe. Gazprom has already proposed to CIS states that they pay more than $200 per 1,000 cubic meters from next year.

Belarus, which is building a union state with Russia, today pays a discounted rate of $46.68 per 1,000 cubic meters, but Gazprom is now seeking a price of $200 or a controlling stake in pipeline company Beltransgaz.

Gas prices for former Soviet republics must cover gas production, preparation and transportation expenses, and also yield profit commensurate with revenues received from gas sales on Western European markets, Gazprom said in a press release.

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