Gazprom Says Merger May Cut Gas Price For Ukraine

MOSCOW, Russia -- A merger deal between Russia's gas giant Gazprom (GAZP.MM: Quote) and Ukraine's state energy company Naftogaz may lead to lower gas prices for Ukrainians, equal to Russia's domestic price tag, Gazprom's head said on Friday.

Ukraine has frequently asked Russia, its main fuel supplier, to lower gas prices due to the dire state of its economy. In 2009 a pricing row between the two governments led to cuts in gas supplies to Europe.

"The gas could be delivered (in the case of merger) to the population of Ukraine, as we believe, at a price, at which gas is delivered to the Russian householders," Gazprom Chief Executive Alexei Miller told state-owned Rossia 24 TV.

Russia has regulated local gas tariffs, set at 1,880 roubles ($61.22) for 1,000 cubic metres. In the second quarter, Gazprom sold gas to Ukraine at around $233 per 1,000 cubic metres.

On Wednesday, Ukraine's prime minister said the base price for Russian natural gas is still disadvantageous for Ukraine despite a new deal reached in April. [ID:nLDE67O0NM]

Last month, Ukraine's government, bowing to pressure from the International Monetary Fund, took the painful step of announcing a 50 percent rise in the price of domestic gas from August.

A merger between Gazprom and Naftogaz was first proposed by Russia's Prime Minister Vladimir Putin in April.

Gazprom has said the firms may create a joint venture before a full-blown merger.

The deal could give Moscow control over Kiev's gas transit network, which ships a fifth of Europe's gas consumption from Siberian fields, and has been a headache for the Kremlin in past years when Kiev suspended supplies during pricing disputes.

Source: XE