Ukraine Ready For Gas Price Increase.

Yesterday, Russia and Ukraine finished the first round of negotiations on energy supply issues. Russian side insisted on Ukraine paying European level prices for its gas. Ukraine’s Fuel & Energy Minister Ivan Plachkov noted to this that the gas price should be raised gradually. Ukraine will increase transit tariffs on Russian gas exports to Europe and will demand a 50% ownership in RosUkrEnergo, a JV of Russian Gazprom and Raiffeisenbank for exports of Turkmen gas. Increase of Ukrainian gas transit tariff would lead to an equivalent raise of transit tariff for exports of Turkmen gas through Russia?s territory to Ukraine. In addition, Ukraine will demand revision of the Gazprom ? Naftogaz Ukrainy agreement as of August 10, 2004. According to this agreement, Gazprom undersupplies 5 bln cm of gas to Ukraine annually counting this volume toward repayment of Ukraine?s previous arrears. Ukraine will likely insist on paying the debt with cash and making Gazprom increase its annual gas supplies by 5 bln cm. Details of the disputable issues are to be agreed upon by expert groups from the two countries by September 10.