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Ukraine, Russia may start talks next year to cut barter in gas trade
Journal Staff Report

KIEV, Sept. 19 - Ukraine may next year start discussions with Russia over gradually reducing barter in natural gas trade within several years, Acting First Deputy Prime Minister Anatoliy Kinakh said Monday.

The comment may signal a change in a position of the government, which has so far been ruling out any reduction in the barter trade until 2013.

Russia currently delivers to Ukraine up to 29 billion cubic meters of gas annually as a payment for shipping about 120bcm of its gas via Ukrainian pipelines to Europe. This barter transaction is carried out with gas price quoted at $50/1,000 cu m.

Russian gas giant Gazprom, encouraged by growing gas prices on world markets, has been over the past seven months insisting to force Ukraine to accept a system when Gazprom would pay cash for the transit, while Ukraine would pay cash for the gas.

At the same time, Gazprom has been pushing for the gas price to more than triple to $160/1,000 cu m, while Ukrainian officials have so far disagreed by arguing the rapid price hike would undermine the economy.

Gazprom has been seeking to introduce the new system as soon as Jan 1, 2006.

“This must be done gradually, in stages, taking into account that the [Ukrainian] economy must stay competitive,” Kinakh said at a press conference.

Ukrainian officials have argued that Gazprom will not be able to unilaterally increase the prices without striking an agreement with Ukraine because Gazprom itself depends on Ukrainian pipelines for 85% of its gas exports to Europe.

Former Prime Minister Yulia Tymoshenko have been ruling any change in the barter system until 2013 by citing an already existing agreement between Naftogaz Ukrayiny and Gazprom. (sb/ez)




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