Russian Gas Price For Ukraine To Jump If No New Deal

KIEV, Ukraine -- The price of Russian gas for Ukraine will jump to $485 per thousand cubic metres in the first quarter of 2012 from about $400 currently unless Moscow and Kiev reach a new gas deal, a senior Ukrainian official was quoted as saying on Friday.

Ukraine, which relies heavily on Russian gas imports, has been in talks with its former Soviet overlord for over a year, trying to negotiate a lower price.

But these talks have so far failed to yield tangible results.

In an interview published on Friday, Ukraine's Deputy Prime Minister Sergei Tigipko told local magazine Fokus that he hoped an agreement would be reached soon.

"We know that (otherwise) the price will be $485 per tcm in the first quarter," Focus quoted Tigipko as saying.

Ukraine consumes about 60 billion cubic metres of gas per year, including 40 billion imported from Russia.

Ukraine insists it is paying too much under the 2009 pricing agreement that set charges for Russian deliveries on the basis of oil and oil product prices which have since risen steeply.

Ukraine's President Viktor Yanukovich said earlier this month negotiations with Russia on gas supplies were going on and it was too early to talk about the new price of imports.

The Kiev government hopes a lower Russian gas price will allow it to cut its budget deficit without raising gas and heating prices for households, something the IMF has insisted should happen.

Disagreement on this issue has stalled talks on restarting a $15 billion (9.7 billion pound) lending programme for Ukraine, and Kiev hopes a new deal with Russia will strengthen its hand in talks with the Fund.

Source: Yahoo News