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Ukraine seeks to diversify gas imports
Journal Staff Report

KIEV, Aug. 14 – Ukraine will seek to develop natural gas fields in Russia, Kazakhstan and Uzbekistan and to build extra gas pipeline capacities to diversify its energy imports, Prime Minister Viktor Yanukovych said Monday.

Yanukovych on Tuesday will join a summit of Eurasian Economic Community, an economic bloc that includes Russia, Kazakhstan, Uzbekistan, Tadjikistan and Belarus, in Sochi during his first foreign trip as the prime minister.

The visit will indicate if Ukraine is set to continue its pro-Western policy or whether Yanukovych, a moderate pro-Russian figure, will try to re-orient the country towards a more Russia-friendly policy.

Yanukovych is also expected to hold a number of bilateral meetings, including with Russian President Vladimir Putin and Prime Minister Mikhail Fradkov, to try to secure extra supplies of gas to Ukraine.

Ukraine has been facing a gap in gas supplies, estimated at about 14 billion cubic meters, or 18% of its annual demand in 2006, after Turkmenistan had suspended supplies on Jan. 1.

Turkmenistan cited several reasons for the decision, including accumulation of gas debts, but also the lack of throughout capacity in a pipeline via Uzbekistan. Turkmen gas has to travel via Uzbekistan, Kazakhstan and Russia before reaching Ukraine.

At the talks with Uzbek President Islam Karimov, Yanukovych will try to secure agreements that would allow Ukrainian companies to build extra gas pipeline capacities in Uzbekistan as well as to develop new gas fields in the region. Similar talks will be held with Kazakh President Nursultan Nazarbayev.

“We will talk on exploration of Uzbek gas fields,” Yanukovych said at a press conference. “We will talk on exploration of Kazakh, Russian fields. This will be the task for the government to diversify energy supplies.”

At the meeting with Putin, Yanukovych will probably seek to secure immediate extra supplies of gas this year and next at prices of $95/1,000 cubic meters that had been agreed in January.

RosUkrEnergo, a Swiss-registered gas trader thought to be controlled by Gazprom, pledged to supply 32 billion cubic meters of gas to Ukraine in 2006 at $95/1,000 cu m. Ukraine needs to import at least 56 billion cubic meters to fully meet its domestic demand this year, analysts said.

Yanukovych, back in January when he was an opposition leader, had criticized the agreement that had boosted gas prices to $95/1,000 cu m from $50.

But this time Yanukovych said the government doesn’t plan to change the agreement, though may actually try to somewhat lower the prices, an outcome that analysts said would be unlikely based on Russia’s determination to charge world market prices.

“If we succeed at the talks to reduce the price by even a dollar, it would be a progress,” Yanukovych said.

Meanwhile, senior Russian officials have been suggesting earlier this year that a gas price reduction would be possible if Ukraine agrees to let Gazprom manage or buy its natural gas pipeline network.

Yanukovych flatly rejected the option.

“For as long as I work as the prime minister, this [gas transportation system] will remain to be Ukrainian property,” Yanukovych said. “We will not do this [selling gas pipelines] because this does not comply with Ukraine’s national interests.” (tl/ez)

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USD 26.47 26.30
RUR 0.418 0.418
EUR 30.68 30.54

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PFTS 499.6 500.4
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