Yushchenko urges agreement with Gazprom to keep gas flows to EU

10:44, 23 September 2008
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Ukraine`s President have interview to Bloomberg

Ukraine`s President Viktor Yushchenko urged his country`s government to sign a contract for natural gas shipments from Russia`s OAO Gazprom for domestic use in 2009, a move that will secure stability of gas flows to Europe.

``These talks should be finished as soon as possible,`` Yushchenko said in an interview in New York yesterday. ``We should not wait until December, because December is when the political component dominates.``

The European Union gets a quarter of its gas from Russia, most of which is shipped across Ukraine. Since 2006, Russia`s gas-export monopoly Gazprom has reduced flows to Ukraine twice during pricing disputes, raising EU concerns about Russia`s reliability as an energy supplier.

Ukraine may be forced to take domestic supplies from gas being shipped to Europe if a deal with Gazprom for 2009 isn`t signed. Ukraine`s state-run NAK Naftogaz Ukrainy said Sept. 16 it doesn`t plan to increase 2009 transit charges for Russian gas using its pipelines in a bid to limit the price it will pay for supplies from Gazprom.

Russia, the world`s largest natural-gas and second-largest oil exporter, also halted deliveries of crude oil to Belarus in 2007 and cut gas supplies to Ukraine by 50 percent this February.

Government officials of Ukraine and Belarus have repeatedly said Russia is using its energy resources to wield influence over its former Soviet satellites. Russia denied the accusations.

Gas `Crucial`

Yushchenko said he told Gazprom Chief Executive Officer Alexei Miller in July that Ukraine seeks to sign the agreement sooner rather than later, including because ``gas price is crucial for some of our key industries, such as metallurgy and chemical companies.`` Oleh Dubina, chief executive officer at Naftogaz, said in an interview in Kiev on Sept. 16 that the country may delay signing the agreement on 2009 gas supplies with Gazprom until Dec. 31.

``I am convinced that the agreement must be signed before the winter months,`` Yushchenko said. ``The major issue is to agree on a formula of the price,`` which should include tariffs that Russia pays for shipping its gas supplies via Ukrainian territory to Europe.

Yushchenko also suggested that Ukraine`s charges to transport Russian gas are still subject to talks. Ukraine relies on Russia for 71 percent of its gas needs.

Russia doubled the gas price for Ukraine in 2006, and raised it by 37 percent in 2007 and by 38 percent this year. Russian Foreign Minister Sergey Lavrov said in June that his country may double the price again for 2009 deliveries.


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