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Markets

Ukraine says Russian gas too pricey

Published June 10, 2016 Updated June 10, 2016 05:54pm

imageKIEV: Ukraine said Friday it would not purchase natural gas from Russia at the price offered by Moscow and instead tap European markets as it continues its shift toward the West.

The head of Russia's gas giant Gazprom said Tuesday he had received a request from Ukraine's state energy company to resume deliveries that were halted in November over another delivery costs row.

The two former Soviet republics -- locked in a bitter feud since Moscow's annexation of Crimea in March 2014 -- have been involved in repeated price disputes that have occasionally resulted in disruptions of gas flows through Ukraine to Europe.

Ukraine's Naftogaz state company confirmed offering Gazprom a chance to be one of its "potential suppliers".

Yet it also stressed that it would only resume purchases from the energy superpower at an advantageous price.

Naftogaz's business development director Yuriy Vitrenko said Russia's energy minister had proposed selling gas to Ukraine for $177 (157 euros) per 1,000 cubic metres in the third quarter of the year.

"With corrections for (the fuel's) energy content, that would make the contract price at around $182 or $183," Vitrenko wrote on Facebook.

Russia's energy minister "thinks this is below market value. We disagree", he added.

Vitrenko said the current German NCG spot market rate was $173. Russia prefers to fix a specific price into long-term contracts with its clients that are subject only to minor adjustments.

"We will never buy gas from Gazprom on these conditions," Vitrenko wrote.

Ukraine has been steadily weening itself off its Russian energy dependence as it establishes closer relations with Western countries in the wake of its February 2014 pro-EU revolution.

Russia supplied 14.5 billion cubic metres of gas to its western neighbour in 2014.

That figure plummeted to 6.1 billion cubic metres last year.

Ukraine's purchases from EU countries soared from 5.1 to 10.3 billion cubic metres over the same span.

About 15 percent of the gas consumed by EU countries flows from Russia through Ukraine.

Copyright AFP (Agence France-Presse), 2016

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