THURSDAY, SEPTEMBER 20, 2018
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Russian-Turkmen gas deal affects Ukraine
Journal Staff Report

KIEV, Sept. 5 – Russia on Tuesday agreed to increase 53% price of natural gas it buys from Turkmenistan, a move that will most likely soon lead to a major gas price hike for Ukraine.

Russia’s gas monopoly Gazprom agreed to buy gas at $100 per 1,000 cubic meters in 2007, up from $65/1,000 cu m currently, following two-month talks with the Central Asian country, Gazprom reported.

The development is a setback for Ukraine, which has been last week seeking to join forces with Gazprom in an attempt to force Turkmenistan to sell gas at a lower price.

The fact that Turkmenistan has prevailed in its price dispute with Gazprom suggests that Ukraine would probably have little room for maneuver but to buy gas from Turkmenistan at the same price.

A price hike to $100/1,000 cu m at the border between Turkmenistan and Uzbekistan would automatically increase the price of gas to $135/1,000 cu m at the border between Ukraine and Russia.

Ukraine currently pays $95/1,000 cu m of gas and the upcoming price hike would mean that Ukrainian consumers would have to pay at least 42% more for gas next year.

But even the 42% price hike may be the best-case option for Ukraine as Gazprom, which emerges as the main purchaser of the Turkmen natural gas, could seek to charge Ukraine even more.

“We will be selling gas to Ukraine in the same way as we sell gas to the European Union,” Igor Shuvalov, an advisor to Russian President Vladimir Putin and one of the most influential people in the Kremlin, told RIA Novosti. “All our partners, friendly and unfriendly, have to pay via the same [gas price] formula.”

Russia is selling gas to Eastern European countries at $230/1,000 cu m, an indicator that may give an idea of what Ukraine may be asked to pay, analysts said.

The price hike makes it more difficult for Ukraine to arrange sufficient gas supplies this year as the country is facing 8 billion cu m gas shortage, or more than 10% of annual demand.

Ukraine has been seeking to buy the missing amount of gas from both, Russia and Turkmenistan, and the latest price hike indicates that Ukraine may end up paying greater prices as soon as this year.

Energy and Fuel Minister Yuriy Boyko on Tuesday tried to downplay Russia-Turkmenistan deal, and said it will have little effect Ukraine’s gas supplies next year.

“There is no reason for a major gas price hike next year,” Boyko said Tuesday when asked to comment on the latest Russia-Turkmenistan deal.

Boyko is due to travel to Turkmenistan in the second half of September to secure extra gas supplies to avoid gas shortages. (nr/ez)

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Currencies (in hryvnias)
  18.09.2018 prev
USD 28.13 28.15
RUR 0.412 0.412
EUR 32.83 32.91

Stock Market
  17.09.2018 prev
PFTS 539.5 531.3
source: PFTS


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