Wednesday, April 21, 2010

Russian and Ukraine Negotiating Again

By Kateryna Choursina and Daryna Krasnolutska
April 20 (Bloomberg) -- Ukraine Prime Minister Mykola Azarov said his country’s talks with neighboring Russia over gas import prices are “extremely difficult,” as he urged companies to reduce energy consumption.
“Everything depends on Russia’s good will,” Azarov said today at a meeting with the country’s confederation of industrial companies in the capital Kiev. Manufacturers need to consume less energy because Ukraine “cannot buy such expensive gas,” he said.
Russian President Dmitry Medvedev and his Ukrainian counterpart Viktor Yanukovych will tomorrow try to finish talks to determine how much Ukraine must pay Moscow for gas imports. The meeting will be their third in two months. Ukraine, which relies on Russia for almost 50 percent of its gas, needs a lower price so it can cut local subsidies and reduce its budget deficit, a condition of its International Monetary Fund loan.
“I hope that we will review the contract and come to a mutually beneficial agreement with Russia,” Azarov said.
The country’s Fuel and Energy Minister Yuriy Boyko was in Moscow yesterday to discuss gas contracts, Russian state- controlled gas supplier OAO Gazpromsaid in a statement, without providing any details.
Gazprom may charge Ukraine an average of $250 to $260 per 1,000 cubic meters of natural gas this year, Vedomosti reported yesterday, citing two unidentified people who referred to Ukrainian Cabinet documents.
Budget Price
The two sides have an agreement in principle on the reduction, the Moscow-based newspaper said.
Russia raised the price it charges for 1,000 cubic meters of natural gas to $360 in the first quarter of 2009, compared with the $179.50 in 2008. The price fell to $305 in the first quarter of this year. The 2010 budget, which has yet to be approved, assumes a gas price of $334, Deputy Prime Minister Serhiy Tigipkosaid on April 15.
Ukraine’s economy contracted 15.1 percent last year, the deepest decline since 1994, as the financial crisis cut demand for its exports, weakened the currency and dried up investments.
To contact the reporter on this story: Kateryna Choursina in Moscow
Last Updated: April 20, 2010 09:33 EDT

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