Bloomberg News

Ukraine Seeks Gas Transit, Investment Guarantees From Russia

January 18, 2012

Jan. 18 (Bloomberg) -- Ukraine is asking Russia for guarantees on natural-gas transit volumes and investments in pipelines as it considers sharing management of the export route to Europe and seeks a new supply contract.

“I’m sure we’ll find a compromise,” Ukrainian Energy and Coal Minister Yuriy Boyko told reporters in Kiev today after holding “constructive” talks yesterday with officials from the Russian gas export monopoly, OAO Gazprom.

Ukraine plans to cut Russian gas imports about 48 percent from contracted volumes this year or agree to lower prices as it seeks to revive a $15.6 billion bailout from the International Monetary Fund. Prices have climbed higher than $400 per 1,000 cubic meters, as Gazprom rejects Ukraine’s bid to revise the contract.

The former Soviet republic may boost gas purchases if the price drops, Boyko said. Ukraine, which holds parliamentary elections in October, must agree on a lower price with Russia within a month or bow to IMF demands for a 30 percent jump in household gas fees.

Ukraine favors forming a group with the European Union and Russia to manage its pipeline system, Boyko said. About 80 percent of Gazprom’s Europe-bound gas deliveries cross through Ukraine. The Moscow-based producer supplies 25 percent of the EU market.

--With assistance from Anna Shiryaevskaya in Moscow. Editors: Torrey Clark, Alex Devine

To contact the reporter on this story: Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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