More Boyko Optimism on Gas Price.

Yury Boyko, energy minister, will meet today with Alexey Miller, chairman of Gazprom, to negotiate gas supplies for the fourth quarter. Gazprom announced Wednesday that it had agreed to pay $100/tcm for Turkmen gas in 4Q06 through 2009, up from the current price of $65/tcm. Although Ukraine gets more than half its gas from Turkmenistan (via Gazprom’s affiliate RosUkrEnergo), and thus the price increase will inevitably be passed on to Ukraine, Boyko claimed yesterday that Ukraine’s new gas import price would be less than $130/tcm – that is, Ukraine’s import price, currently $95/tcm, would increase by less than $35/tcm. Boyko also reiterated that Ukraine’s price increase would be delayed until January 2007. Vladimir Nesterenko: Our calculations of RosUkrEnergo’s increased costs since January 2006, including an increase in the Kazakh gas price last May and our expectation that the Uzbek gas price will increase in the near future, shows that, other factors being equal, Ukraine’s gas import price should increase to $140-145/tcm in 2007. However, the new Ukrainian government apparently expects to bargain a lower price by offering Russia and Gazprom assets and other favors. We forecast the 2007 gas price at $130-140/tcm at the Ukraine border.