Natgas Talks With Russia Fail To Progress

KIEV, Oct. 22 – Russia is awaiting an estimate of the market price of the Ukrainian natural gas pipeline, as parties on Monday failed to make progress in talks over gas prices.

Russian President Vladimir Putin listens to his Ukrainian counterpart Viktor Yanukovych (L), at the Novo Ogaryovo residence outside Moscow on Monday.

President Viktor Yanukovych, after the talks with his Russian counterpart Vladimir Putin in Moscow, said Ukraine will continue discussions seeking an “economically justified” gas price and a “just formula for gas price setting.”

Ukraine has been unsuccessfully trying over the past 2.5 years to renegotiate lower Russian gas prices from $432 per 1,000 cu m to less than $250 per 1,000 cu m. 

Russia has refused to negotiate, but has suggested Kiev join a Moscow-led trade bloc, the Customs Union, after the price of gas would drop to $160 per 1,000 cu m, according to Prime Minister Mykola Azarov.

Ukraine has been refusing to join the Customs Union, a move that would most certainly postpone the country’s integration with the European Union.

But following the meeting with Putin on Monday, Yanukovych said greater cooperation within the trading bloc would benefit all countries.

“We believe that the cooperation with the Customs Union would bring much good to our producers,” Yanukovych told Putin.

“We have to deepen these relations and this will only benefit our economies.” 

Yanukopvych has earlier suggested that Ukraine can increase economic cooperation with the Customs Union countries, such as Russia, Belarus and Kazakhstanm, without making any political commitment.

He called this a “3+1 formula.”

Russia has rejected the formula, and insisted that Ukraine must join the bloc as a full-fledged member in order to benefit from increasing cooperation.

Putin defended again such approach and said only the members would receive the benefits.

“This is so much important for the future of both, Russian and Ukrainian economies, that this is natural that special conditions are created for development of cooperation ties,” Putin said.

Alexander Medvedev, deputy chairman of Gazprom, said that the Russian gas company is awaiting a market price evaluation of Ukrainian gas pipelines that move a bulk of Russian gas to Europe.

The estimate of the pipeline’s values was needed for Ukraine to decide on potential natural gas transmit joint venture that may be created with the Russians.

“We are expecting to receive this in the near future,” Medvedev said.

Gazprom CEO Alexei Miller earlier said Ukraine’s gas transportation system cannot be worth more than $10 billion, while the Ukrainian government has insisted it is worth much more, potentially several times more.

Source: Ukrainian Journal