Monday, 2 May 2011

Boyko says Ukraine, Russia to reach compromise on revision of gas contracts by September

Ukraine's state oil and gas company Naftogaz and Russia's Gazprom will reach by September 2011 an agreement on the revision of the natural gas price formula that is unprofitable for Ukraine, Energy and Coal Industry Minister Yuriy Boyko has said.

"I'm confident that we will reach a compromise this summer... We will reach a compromise before the price of gas for our country significantly grows, and this will happen in the fourth quarter," he said on the Big Politics talk show on the Inter TV channel late on Friday.

Boiko said that the current Ukrainian government was constantly working on the revision of the gas agreements signed in January 2009.

"If one of the sides is dissatisfied with contractual relations, then, of course, the contract will not work for a long time... We believe that the contract should be reviewed. We are constantly working on this," he said.

Boiko also noted that Ukraine and Russia would reach an agreement without resorting to litigation, although this is envisaged in the current gas agreements.

"Of course, such a [possibility of resolving disputes in the Stockholm arbitration] is envisaged there, but I'm sure that taking into account the level of our cooperation and understanding our mutual responsibility, we will reach agreement without any litigation," he said, adding that Ukraine is not only the largest country transiting Russian gas, but also the largest gas consumer.

"We have such a high level of mutual cooperation and a wide field of economic relations that we are just obliged to reach agreement," Boyko said.

As reported, Boiko met with Gazprom CEO Alexei Miller in Moscow on April 28 to discuss strategic cooperation and bilateral relations in the gas sphere.

According to Russian-Ukrainian gas contracts signed in January 2009 for the period to 2020, the price of Russian gas is based on a formula that takes changes in the price of fuel oil and gasoil into account.

Ukraine has repeatedly talked of the need to review the formula for importing Russian gas in contracts between Gazprom and Naftogaz.

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