07:15 GMT +311 December 2017
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    Company Watch: Gazprom's negotiating position

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    MOSCOW, December 26 (RIA Novosti, Peter Lavelle) - Russian energy giant Gazprom announced it had set its Ukrainian gas price at $230 per 1,000 cubic meters and had officially extended that offer to its Ukrainian counterpart, Naftogaz. Gazprom had originally stated it wanted to raise rates to $160 per 1,000 cu m from $50 at present, but later increased its demand to equal European rates.

    The difficulty to reach agreement on pricing continued last week, with Gazprom offering to accept stakes in Ukrainian enterprises - in particular the country's natural gas transportation network - instead of cash payment for natural gas. Gazprom appears very interested in acquiring control over remaining parts of the Europe-bound gas transportation network, even accepting a price of $46.68 per 1,000 cu m from Belarus last week after Minsk agreed to hand over 50% of its gas transport company, Beltransgaz.

    Ukraine last week offered to gradually raise prices toward market levels. It appears that the country hopes the delay will eventually force Gazprom to compromise amid concerns about defaulting on European gas supplies, while threatening to take Gazprom to Stockholm's arbitration court in order to achieve resolution of the issue.

    It should be expected that the situation will be resolved in Gazprom's favor, with additional revenues from higher prices offset to some extent by reciprocal increases in transportation expenses.

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