Jamestown Foundation: Ukraine Braces for Gas Transportation Consortium with Russia
Kyiv’s hopes for cheaper Russian gas from January 1, have failed to materialize. However, gas talks are continuing and there are signs that Moscow will agree to cut the price of gas in exchange for a share in a consortium to be set up to operate Ukraine’s pipelines carrying Russian gas to the EU. The main dispute is about the size of this share, as Russia wants to obtain control of Ukraine’s gas transportation system, while Kyiv hopes to dilute Gazprom’s participation in the pipelines with the EU’s help.
Ukrainian President, Viktor Yanukovych, and Prime Minister, Mykola Azarov, pinned high hopes on their meetings with the Russian leadership in Moscow on December 20, and the Ukrainian dailies Kommersant-Ukraine and Segodnya even reported on December 21 that Azarov would announce a new gas price later that day. Ukraine hoped to lower the price from the $400 per 1,000 cubic meters of gas, which it paid Gazprom in the fourth quarter of 2011, to between $210 and $230. In this case, the budget of the state-subsidized oil and gas company, Naftogaz Ukrainy, for next year might have been balanced and the International Monetary Fund (IMF) may have unfrozen its $15 billion assistance package to Ukraine. The government’s failure to improve the situation at Naftohaz was one of the main reasons behind the IMF’s refusal to issue loans to Ukraine last year.
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