Saturday, March 21, 2015

Ukrainian Minister: Russia to sharply reduce the price of gas – Pulse of Business

Demczyszyn spoke on the topic for Reuters, referring to Friday’s talks in Brussels with Russia and the European Commission on the gas supply. As expected, these talks have not yet produced an agreement, but participants agreed that the atmosphere was constructive and announced that they will meet again next month.

As part of the current contract, which expires at the end of March., Ukraine pays $ 329 per thousand cubic meters of gas, and Russia announced that later the price will rise to 348 USD. According Demczyszyna Russia understood, however, that “in order to remain competitive, it must go below $ 250.”

The Ukrainian minister believes that a reasonable price would be US $ 240-250, and in the third quarter. 210-220 USD, due to the decline in energy commodity prices.

In the last decade, Russia three times cut off gas supplies to Ukraine because of price disputes. Demczyszyn asserts, however, that the increase in gas imports from the EU, coupled with the decreasing consumption of raw materials in Ukraine and low energy prices strengthened the bargaining position of Kiev.

“The Russian side is aware that it needs to compete on price. As long as the price is higher than the market price – the price at which we can get gas from Europe – we will not need Russian gas,” – said the Ukrainian minister.

The European Commission announced on Friday after a meeting of energy ministers of Russia and Ukraine in Brussels that these countries agreed on Friday to begin work immediately on a new agreement on gas deliveries for the next winter. European Commission Vice-President Maroš Szefczovicz also stressed that he had received assurance that “the transit of gas to the EU will remain undisturbed.”

In a joint statement, agreed on Friday, Russia announced that it would consider granting a discount at the request of Ukraine under contract gas supply, in the form of a reduced export duty. On the other hand, Ukraine declares that it would consider the purchase of the amount of gas needed to fill the tanks. According to estimates, currently in the Ukrainian tanks is approx. 7.5 billion cubic meters of gas, and the next winter stocks should be increased to 18-19 billion cubic meters.

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