Russia, Ukraine set to restart gas talks

MOSCOW - Reuters

Ukraine and Russia will renew gas talks on Jan. 15, Russia’s Gazprom said yesterday, as they strive to avert a standoff over pricing, which in the past has led to supply cuts and gas shortages in Europe during New Year holidays.

Both countries have pledged to ensure steady gas flows to the Europe Union, which relies on Russia for one quarter of its gas supplies, despite differences over pricing and the ownership of Ukraine’s strategic gas pipeline system.

Kiev and Moscow have been locked in difficult gas talks for the past year as Ukraine, whose fragile economy is suffering from a budget deficit, seeks a cut in the cost of Russian gas, which is set to rise to $416 per thousand cubic metrs (tcm) in the first quarter of 2012 to match what the EU is paying. The price is currently around $400 per thousand cubic metres. Ukrainian President Viktor Yanukovich said last week he considered $250 per tcm the highest acceptable price.

But Russia has been adamant in saying Ukraine must stick to the multi-year contract signed in 2009. Moscow also faces a budgetary squeeze next year as it is set to embark on a public spending spree ahead of March 4 presidential elections, which Prime Minister Vladimir Putin is poised to win.
On Dec. 23, Gazprom Chief Executive Officer Alexei Miller and Ukrainian Energy Minister Yury Boiko met in Russia’s second-largest city of St. Petersburg.

“The participants have taken note of the positive and constructive character of the 2011 talks and good perspectives for the next round of talks, which will take place on Jan. 15,” Gazprom said in a statement on yesterday.