It'll cost you: Gazprom has agreed to pay more for Central Asian gas
Gazprom takes Asia price rise on chin
Russian gas giant Gazprom said it will pay higher prices for imports of Central Asian gas from next year, announcing the price rise the day before it starts another round of supply talks with Ukraine.
Gazprom said in a statement it had agreed to buy gas from the former Soviet states of Uzbekistan, Kazakhstan and Turkmenistan at prices close to what it charges European customers, minus transport and other costs.
Gazprom charges Europe around $378 per 1000 cubic metres and prices may rise to $400 per Mcm, a Gazprom source told Reuters, implying a huge price spike for Ukraine, which is paying $179.5 per Mcm for the Central Asian gas it buys from Gazprom this year.
The announcement comes ahead of the start of a new round of talks between Gazprom and Naftogaz Ukrainy tomorrow. The pair hope to hammer out a 2008 supply deal after Moscow briefly reduced supplies last week due to a debt dispute with Kiev.
Market analysts are closely watching talks between the two states after a pricing row briefly disrupted supplies of Russian gas to Europe via Ukraine in January 2006, sending jitters through the European Union and forcing it to consider its reliance on Russian energy.
Gazprom supplies a quarter of Europe's gas, with most of that travelling by pipeline which crosses Ukraine.
Gazprom's chief executive Alexei Miller met with the heads from national gas companies Uzbekneftegaz, KazMunaiGaz and Turkmengaz, in Moscow today.
"Given the national interests of the economies involved and taking into account international obligations to provide reliable and uninterrupted energy supplies, from 2009 the sale of natural gas will be the same as European prices," Gazprom quoted the heads of the Central Asian companies as saying.
Gazprom imports around 70 billion cubic metres of gas from Uzbekistan, Turkmenistan and Kazakhstan to help cover demand in Russia, the former Soviet Union and Europe amid stagnant output in Siberia.
Gazprom produces 550 Bcm a year and exports around 150 Bcm to Europe.