USD 95 Gas Price Extended Through September.

Yuri Yekhanurov, the outgoing prime minister, announced today RosUkrEnergo had agreed to continue gas supplies in 3Q06 at the current price of USD 95/tcm. Meanwhile, Ukraine’s energy minister, Ivan Plachkov, and the acting chairman of Naftogaz are in Ashgabad today to negotiate fourth-quarter gas supplies. The ministry said Plachkov would seek to restore “direct” purchases at the Turkmen border and that he would insist that at least 10-12 bcm would be supplied at USD 60/tcm. The Turkmen president, Saparmurat Niyazov, has said he wants to increase the price to USD 100/tcm. Gazprom, which currently buys Turkmen gas for USD 65/tcm and supplies it to Ukraine through its joint venture RosUkrEnergo for USD 95/tcm, has rejected Niyazov’s demand for what would be a 54% price increase. Gazprom deputy chairmam Alexander Ryazanov said today that the 30 bcm of gas that Gazprom had contracted to buy from Turkmenistan would be used up by Sept. 22-27. Vladimir Nesterenko: With Yulia Tymoshenko planning to re-open negotiations with Gazprom, RosUkrEnergo is apparently eager to secure its position. We are still expecting a gas price increase in the second half of the year. We still believe Ukraine will not be able to restore direct purchases from Turkmenistan and that Gazprom will eventually agree to buy additional Turkmen gas supplies.