KIEV, June 19 (RIA Novosti) - Ukraine's fuel and energy ministry said Monday the country faces a massive deficit of natural gas this year, and said negotiations are needed with Russia and Turkmenistan to solve the problem. Ukraine is largely dependent on the two other former Soviet republics for natural gas. At the beginning of the year it was involved in a bitter pricing spat with Russia that was only resolved when the two countries' leading energy companies reached an agreement after Russia briefly cut supplies. The ministry said the Ukrainian government should hold urgent negotiations "with the Russian and Turkmen sides to sign contracts on supplies of 10.7 bln cu m of gas to Ukraine in 2006 to ensure the gas balance in the country." Earlier Monday, the ministry said Fuel and Energy Minister Ivan Plachkov's visit to Turkmenistan had been postponed. Ukrainian officials also said the country would seek a resumption of direct gas supplies from Turkmenistan. Rosukrenergo, which was the key company in a deal to end a bitter price row between the former Soviet neighbors early this year, is 50% owned by a subsidiary of Russian energy giant Gazprom, with the other 50% held by Austria's Raiffeisen Investment. In early January, Russian energy giant Gazprom signed a five-year contract for supplies of 17 billion cu m of Russian natural gas to Ukraine.
Ukraine is largely dependent on the two other former Soviet republics for natural gas. At the beginning of the year it was involved in a bitter pricing spat with Russia that was only resolved when the two countries' leading energy companies reached an agreement after Russia briefly cut supplies.
The ministry said the Ukrainian government should hold urgent negotiations "with the Russian and Turkmen sides to sign contracts on supplies of 10.7 bln cu m of gas to Ukraine in 2006 to ensure the gas balance in the country."
Earlier Monday, the ministry said Fuel and Energy Minister Ivan Plachkov's visit to Turkmenistan had been postponed.
Ukrainian officials also said the country would seek a resumption of direct gas supplies from Turkmenistan.
Rosukrenergo, which was the key company in a deal to end a bitter price row between the former Soviet neighbors early this year, is 50% owned by a subsidiary of Russian energy giant Gazprom, with the other 50% held by Austria's Raiffeisen Investment.
In early January, Russian energy giant Gazprom signed a five-year contract for supplies of 17 billion cu m of Russian natural gas to Ukraine.
Russian business daily Vedomosti reported on Tuesday, June 20, that in the second half of 2006 Turkmenistan plans to double the price of its natural gas. Increase in price of Turkmen gas to $110-125 will mean the breakdown of the gas agreement between Russia and Ukraine, because the majority of Central Asian gas goes to Russia's neighbor. The prices and volumes of deliveries of Turkmen gas to Russia were discussed at negotiations between chairman of Gazprom Alexei Miller and the President of Turkmenistan Saparmurat Niyazov. The meeting took place on Monday and no agreement was reached. According to the paper's information, Niyazov announced that the price of Turkmen gas will be increased from $66 per 1,000 cubic meters to $110-125 with the same volumes of deliveries. If Niyazov insists on his new price, the agreement between Russia's natural gas monopoly and Ukraine will be in danger of failure. With the new price and transportation expenses factored in Turkmen gas will cost Ukraine at least $140 per 1,000 cubic meters. Meanwhile the Russian-Ukrainian agreement signed in the beginning of 2006 specified a price for Turkmen gas at $95 per 1,000 cubic meters. Although Russia said that the agreement was subject to reconsideration for the second part of the year, it is unlikely that Ukraine will agree to new conditions. "Ukraine won't agree to raise the price from $95 because that would mean destruction of the national economy," presidential advisor Ivan Diyak told Vedomosti. The paper also reported that in the near future Turkmen president will hold consultations with the representatives of the Russian government, returning then to negotiations with Gazprom. The experts, interviewed by Vedomosti, agree that most likely the Russian officials will convince Turkmenistan not to raise the price this drastically. But even if Niyazov agrees to hold off from upping his gas tariffs, the possibility of him doing so will remain. This means that Russia and Ukraine are likely to once again engage in bitter conflict over gas prices.
The prices and volumes of deliveries of Turkmen gas to Russia were discussed at negotiations between chairman of Gazprom Alexei Miller and the President of Turkmenistan Saparmurat Niyazov. The meeting took place on Monday and no agreement was reached. According to the paper's information, Niyazov announced that the price of Turkmen gas will be increased from $66 per 1,000 cubic meters to $110-125 with the same volumes of deliveries.
If Niyazov insists on his new price, the agreement between Russia's natural gas monopoly and Ukraine will be in danger of failure. With the new price and transportation expenses factored in Turkmen gas will cost Ukraine at least $140 per 1,000 cubic meters. Meanwhile the Russian-Ukrainian agreement signed in the beginning of 2006 specified a price for Turkmen gas at $95 per 1,000 cubic meters. Although Russia said that the agreement was subject to reconsideration for the second part of the year, it is unlikely that Ukraine will agree to new conditions.
"Ukraine won't agree to raise the price from $95 because that would mean destruction of the national economy," presidential advisor Ivan Diyak told Vedomosti.
The paper also reported that in the near future Turkmen president will hold consultations with the representatives of the Russian government, returning then to negotiations with Gazprom. The experts, interviewed by Vedomosti, agree that most likely the Russian officials will convince Turkmenistan not to raise the price this drastically. But even if Niyazov agrees to hold off from upping his gas tariffs, the possibility of him doing so will remain. This means that Russia and Ukraine are likely to once again engage in bitter conflict over gas prices.
