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Yushchenko asks PM for gas deal details
Journal Staff Report

KIEV, March 13 - President Viktor Yushchenko on Thursday asked Prime Minister Yulia Tymoshenko to provide details of the latest natural gas agreement between Ukraine and Russia and whether it meets instructions he had issued earlier.

Yushchenko, who visits Brussels on Thursday, asked Tymoshenko and Oleh Dubyna, the head of Naftogaz Ukrayiny, the national oil and gas company, to show up in his office Friday for the report.

The report must take place before the agreement is getting further approval according to domestic requirements, Yushchenko said in a statement released by his press service.

Yushchenkos comment comes hours after Naftogaz and Gazprom of Russia reported they had reached the agreement stipulating supplies of natural gas to Ukraine through the end of the year.

The agreement calls for supplies of 49.8 billion cubic meters of gas to Ukraine in March through the end of December at the price of $179.5 per 1,000 cubic meters.

The agreement also stipulates that Naftogaz will return some of the earlier supplied gas to Gazprom in-kind, apparently settling a $600 million gas debt dispute with the Russian company.

Gazprom earlier insisted it had supplied 1.9 billion cu m of its more expensive Russian gas to Ukraine in January through February to compensate for shortfall in supplies of cheaper gas from the Central Asia.

The price of this disputed gas has been earlier estimated at $321 per 1,000 cu m, almost twice as much as the price of $179.5/1,000 cu m for gas supplies from the Central Asia.

Although Ukraine will not be paying the high gas price and will simply return the gas back to Gazprom, the quoted price figure itself already caused concerns at the Yushchenko office.

I am concerned about this because this is a precedent and an opinion of lawyers is very important, Yushchenko said.

The concern is that Gazprom, once stipulating the price of $321/1,000 cu m, may now push for a major hike in gas prices starting in 2009 that may slow the Ukrainian economy.

This was not part of a deal between me and Russian President Vladimir Putin on February 12, Yushchenko said referring his meeting with the Russian president in Moscow.

Meanwhile, the office of Yushchenko was also concerned that Gazprom will now be provided a quota for direct supplies of natural gas to Ukrainian industrial consumers.

The agreement calls for allowing Gazprom to directly sell 7.5 billion cu m of gas, or 10% Ukraines annual demand, to lucrative industrial sector.

In the arrangement that was in place in 2006 and 2007, Gazprom had access to Ukrainian gas supply market through a 25% stake in UkrGaz-Energo, a gas trader that will now be eliminated.

Roman Zhukovskiy, the head of the economic department at the presidential office, argued it would be a better option to set up a joint venture in which Gazprom would control between 25% and 50% stake, rather than allowing the Russian company to directly access the market.

The government approved a different decision and let Gazprom enter the market, Zhukovskiy said at a press conference, adding that the aggressive expansion of Gazprom may spell out trouble for Ukraine by giving Gazprom control over a major share of the economy.

But this company [Gazprom] would be very dangerous if it starts to supply 7.5 billion cu m, and later [expands] to 10 billion cu m and so on, Zhukovskiy said.

The joint ventures anticipated in the presidential instructions [for the talks with Gazprom] would be a much safer option, Zhukovskiy said. (sb/ez)




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