Bloomberg News

Ukraine ‘Hopes’ to Finish Russia Gas Talks Soon, Klyuev Say

February 20, 2012

(Updates with Naryshkin comment in seventh paragraph.)

Feb. 20 (Bloomberg) -- Ukraine is seeking to “overcome disagreements” with Russia and hopes to complete talks on natural-gas price agreements soon, said National Defense and Security Council Secretary Andriy Klyuev.

Klyuev met with Sergei Naryshkin, the speaker of Russia’s lower house of parliament, today in Ukraine’s capital city of Kiev, according to an e-mailed statement from the council.

“I expect both sides will work out an optimal, economically grounded and fair gas price formula for Ukraine,” Klyuev said.

Ukraine ships as much as 80 percent of Russia’s Europe- bound gas through its Soviet-era pipeline network, and depends on Russia for more than 70 percent of its gas needs. The countries signed a 10-year contract in 2009 to end a pricing dispute that had disrupted winter supplies to Europe for the second time in four years. The next year, Russia agreed to provide a discount of as much as a 30 percent.

Ukrainian President Viktor Yanukovych has said the formula is “enslaving.” The country wants to cut the price to $250 per 1,000 cubic meters from $416, Yanukovych said Dec. 21.

Russia has asked for control of Ukraine’s gas-transit pipeline to Europe in return for cheaper supplies of the fuel to its neighbor. Ukraine has refused, Energy and Coal Minister Yuriy Boyko said Jan. 13.

‘Dynamic’ Talks

“Talks are dynamic,” Naryshkin said today after meeting Ukraine’s Prime Minister Mykola Azarov. “Russia’s Energy Ministry submitted a new draft agreement to the Ukrainian side,” he said without providing details.

Russia’s OAO Gazprom may give Ukraine a 10 percent discount on the price of gas, Kommersant-Ukraine newspaper reported today, citing an unidentified person familiar with the matter. Gazprom expects Ukraine to purchase 33 billion cubic meters of gas this year in line with the existing contract and not to request any further price cuts, the Kiev-based newspaper reported.

Ukraine has planned to cut imports to 27 billion cubic meters of gas this year compared with 40 billion last year.

The Energy Ministry in Moscow declined to comment on the newspaper report and Sergei Kupriyanov, a spokesman for OAO Gazprom, Russia’s gas exporter, didn’t immediately answer his phone or respond to messages when called by Bloomberg News.

--With assistance from Kateryna Choursina in Kiev and Anna Shiryaevskaya in Moscow. Editors: Alex Devine, Randall Hackley

To contact the reporter on this story: Daryna Krasnolutska in Kiev at;

To contact the editor responsible for this story: Balazs Penz at

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