TOPIC 'Natural Gas / Liquid Gas' on Feb 09, 2009 (CET)
Will Natural Gas Start Flowing From Russia This Time?
It has been reported that Gazprom, Russia’s massive energy giant, and Naftogaz, Ukraine’s natural gas company, have finally reached an agreement that should satisfy both parties. The documents were being prepared as of Sunday, January 18, 2009, for representatives of both utilities to sign. Upon execution of this formal agreement, gas should begin flowing again through Ukraine and to a very cold Europe.
The contract basically agrees that Ukraine will pay for its natural gas at the European price plus a 20 percent discount for 2009. At the same time, the Ukraine will not request additional transit fees from Russia for allowing the transport of the gas across its land. Russian Prime Minister Vladimir Putin said that beginning in 2010, Ukraine will pay the “full market price” for natural gas from Russia and Russia will pay “European market prices” to transport the gas.
Ukraine is said to have paid $179.5 per 1,000 cubic meters of gas from Russia in 2008. That figure is less than half what European customers paid. The cost for natural gas to Europeans is $450 per 1,000 cubic meters for the first quarter of 2009. However, prices are anticipated to decrease later in the year.
Russia stopped the flow of natural gas to Ukraine on January 1, 2009, after talks broke down regarding disagreements on prices for 2009 and current debt. Gazprom later stopped the flow of gas to Europe completely, as they insisted that Ukraine was stealing gas by siphoning it from the pipeline. A commission from the European Union intervened once and thought they had reached a settlement. That agreement broke down when Ukraine wanted to add an amendment to the agreement. In the meantime, several deaths in Europe have resulted from the cold and lack of natural gas for heating.
Both sides agreed that talks have been difficult but they eventually reached a mutual understanding. Once the formal documents are signed, natural gas supplies should begin to flow again to Ukraine and to Europe.
Sherry Irvin
on behalf of the
BascoTec Internet Limited
Technologie Park 13
33100 Paderborn
Germany
