Ukraine Seeks "German Price" for Gas From Russia - Ukrainian President

KYIV, Ukraine, September 7, 2011 /PRNewswire/ --

Ukraine expects to pay full but fair price for gas, which is comparable to that of the European market, said the President of Ukraine Viktor Yanukovych in his interview with Kommersant. The country's leadership is set to reinforce effective international agreements signed by Ukraine and Russia.

Kyiv prepared a set of documents to argue the price, which the Russian side has set for gas, in the international arbitration. Under a contract signed in 2009, Ukraine now pays about USD 355 per 1,000 cubic meters. That is approximately USD 200 more than the gas price set for Germany. Ukraine wants the Russian side to follow the price formula established for Germany minus transportation costs, minus the USD 100 discount per 1,000 cubic meters, provisioned by the so-called Kharkiv agreements signed in 2010. "German E.ON Ruhrgas has filed a lawsuit against Gazprom, demanding a revision of the contract price. What we (Ukraine. - Ed.) are talking about is the current price for Germany to be taken as the basic price for us," highlighted Ukrainian president.

Ukraine overpays USD 5-6 billion annually due to the terms of its current gas agreement with Russia, said Viktor Yanukovych. In the run of the 10-year contract the disputed amount may add up to USD 60 billion.

Kyiv stressed that the inter-government agreement of 2001, ratified by both governments, should remain a point of reference for Ukraine-Russia gas relations. The agreement stipulates annual reexamination of gas supplies: volume, price and transit terms. This agreement, however, has been disregarded, according to Viktor Yanukovych. Therefore, the 10-year contract signed two years ago violates the aforementioned agreement.  

The negotiations between the two countries over the gas price have lasted for 18 months now. In the course of the dispute Ukraine continues to make due payments in compliance with the existing contracts. The country seeks to finalize the talks and sees international courts as a last resort to establish fair price.

The 2009 gas agreement signed between Ukrainian Naftogaz and Russian Gazprom led to an ongoing trial of the former Ukrainian Prime Minister Yuliia Tymsohenko. She was charged with abuse-of-office while railroading Naftogaz into signing the unfavorable for Ukraine gas contract.