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Kiev fires new salvo in Russia gas row



By Upstream staff 

Tensions are becoming increasingly strained between the Ukraine and Russia as Ukrainian Prime Minister Yulia Tymoshenko suggested today that the transit fee Russia pays to pipe gas through Ukrainian territory to Europe was too low and called for talks with Moscow.

"As gas prices have almost tripled and the cost of transit has not risen, I think the time has come to have discussions between Ukraine and Russia about the transit cost of gas through Ukraine to Europe," Tymoshenko told Reuters.

Meanwhile, Russia has introduced new demands in the sensative negotiations over the gas price it charges neighbouring Ukraine, a key transit route to Europe.

The demands come after Turkmenistan, from which Russia gets a significant portion of its gas, said it was raising the price it charges Moscow.

Ukraine is the transit route for most of Russia's gas exports to the European Union, which rely on Russia for about a quarter of their consumption. The gas pricing issue has led to tensions between Russia and the Ukraine which last year prompted a brief cut in supplies, causing knock-on disruption for several EU countries.

Russia's Gazprom said yesterday that it had agreed to an increase in the price it pays Turkmenistan from $100 per 1000 cubic meters currently to $130 per Mcm from January and $150 per Mcm from the second half of next year.

"This means an automatic increase for Kiev," a source close to the negotiations in Kiev told AFP, referring to the Turkmen price rise.

Although Russia holds the world's largest gas reserves, lack of development of those reserves means it has to supplement its supplies with imports from Turkmenistan and other Central Asian states.

Russian press reports have said that European customers can expect a substantial increase next year in the prices they pay for gas from Russia.

Gazprom currently charges Ukraine $130 per Mcm, considerably less than it charges EU countries.

Before today’s comments, Ukraine and Russia had been talking about a rise to between $150 per Mcm and $160 per Mcm.

Wednesday, 23 January, 2008, 14:14 GMT  | last updated: Thursday, 24 January, 2008, 14:10 GMT

Rising tensions: the spat between Moscow and Kiev intensives.
 

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