WEDNESDAY, JULY 18, 2018
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Russia, Ukraine fail to reach gas deal
Journal Staff Report

KIEV, Aug. 16 – Ukraine on Wednesday failed to secure additional natural gas supplies and steady gas prices in difficult talks with Russia raising concerns over another wave of standoff by the end of the year.

Prime Minister Viktor Yanukovych met Russian President Vladimir Putin and Prime Minister Mikhail Fradkov in Sochi trying to secure sufficient gas supplies amid looming shortages.

But the meetings led to no deal, while Russia had been apparently seeking to encourage Ukraine to join the Euro-Asian Economic Community, a Russia-led economic bloc of former Soviet Union nations.

“For the Ukrainian prime minister there is nothing to boast about,” Volodymyr Saprykin, an energy analyst with Razumkov Center, a Kiev-based think tank, said. “That’s why he said he will report about the results later.”

Ukraine needs to import about 56 billion cubic meters of gas this year to meet domestic demand, but RosUkrEnergo, a controversial gas trader controlled by Gazprom and the country’s only gas supplier, has pledged to deliver 32 billion.

Ukraine planned to import the remaining 24 billion cu m directly from Turkmenistan, but the Central Asian country had increased the prices to a level that make the imports prohibitively expensive.

The development left Ukraine with an estimated gap in gas supplies and Yanukovych, during his first foreign trip after appointment on Aug. 4, had been seeking to secure sufficient supplies.

Yanukovych on Wednesday admitted the talks had been “very difficult” and added Energy and Fuel Minister Yuriy Boyko and Gazprom CEO Alexei Miller will continue the talks to try to reach a deal later this year.

“This is what we have agreed to do,” Yanukovych said at a press conference in Simferopol. “We will continue to work together.”

RosUkrEnergo buys Turkmen gas at $65 per 1,000 cu m and delivers it to Ukraine via pipelines in Uzbekistan, Kazakhstan and Russia to sell at $95/1,000 cu m. But Turkmenistan has already vowed to boost the price to $100 later this year, which would automatically increase the price that Ukraine pays for imported natural gas.

Yanukovych said Ukraine may end up paying between $150 and $230 per 1,000 cu m next year and added his government would try to prevent a steep price hike.

“The next year’s [gas price] will depend on [world] market,” Yanukovych said.

As Yanukovych made little progress in talks with Russia, Ukraine will probably seek to boost imports of gas from Kazakhstan. In Sochi, Yanukovych also met Kazakh President Nursultan Nazarbayev and Uzbek President Islam Karimov, for the talks.

“We are talking about boosting supplies,” Yanukovych said. “Diversification of energy sources if our strategy and will be handling this.”

Ukraine is expected to import 6 billion cu m of gas from Kazakhstan this year, apparently within the quota that has to be supplied by RosUkrEnergo. (nr/ez)

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USD 26.21 26.23
RUR 0.421 0.421
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