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Boyko off to Moscow after Turkmen deal
Journal Staff Report

KIEV, Sept. 6 - Energy and Fuel Minister Yuriy Boyko will rush to Moscow on Thursday for talks with Russia over natural gas supplies following a Russian-Turkmen deal that would most likely boost gas prices for Ukraine.

Boyko will hold a meeting with Gazprom CEO Alexei Miller to discuss natural gas supplies later this year and in 2007, and prices that Ukraine will be charged, the ministry said.

Ukraine is trying to secure additional natural gas supplies this year as the country faces gas supplies shortages of up to 8 billion cubic meters, or more than 10% of its annual demand.

The talks come two days after Gazprom agreed to increase by 53% the price of the natural gas it buys from Turkmenistan to $100 per 1,000 cu m in 2007, the ministry said.

The development is a setback for Ukraine, which earlier sought to join forces with Gazprom in an attempt to force Turkmenistan to sell gas at a lower price.

Turkmenistan was the largest supplier of natural gas to Ukraine over the past four years, but suspended the supplies on Jan. 1, citing Ukraine’s growing gas debts. Ukraine has since been seeking to resume direct imports of gas from Turkmenistan to cover looming gas supply shortages, officials said.

Hours after the Russian-Turkmen gas deal was signed, Boyko apparently phoned his counterparts in Turkmenistan and Russia amid concerns that natural gas prices for Ukraine will steeply increase, a source at the ministry said.

"Theoretically Russia can raise the question of increasing the gas price for Ukraine,” the source said.

Gazprom and Turkmenistan agreed on Tuesday on purchasing an extra 12 billion cu m of gas to supply to Ukraine in Q4 2006. The price of this gas will increase from $65 to $100 per 1,000 cubic meters. In 2007-2009 Russia will also buy Turkmen gas at $100 per 1,000 cu m.

The fact that Turkmenistan has prevailed in its price dispute with Gazprom suggests that Ukraine would probably have little choice 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 Boyko on Wednesday again downplayed the chance that gas prices will dramatically increase. He said the price will probably be lower than $130/1,000 cu m in 2007, refusing to elaborate as the talks continue. (nr/ez)

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