Naftogaz and Gazprom Agree to Remove Ukrgaz-Energo from Ukraine’s Domestic Market

According to Prime Minister Yulia Tymoshenko and today’s press release from Gazprom, starting in March 2008 all imported gas will be purchased by solely Naftogaz of Ukraine. This means that Ukrgaz-Energo, which has been the exclusive seller of imported gas to industrial consumers in Ukraine since 2006, will be redundant. According Gazprom, Naftogaz of Ukraine will buy 49.8 bln bcm of gas over March-December 2008 at USD 179.5/tcm. The parties also agreed that Naftogaz’s debt for gas will be offset by Naftogaz giving back volumes (estimated at 9.1 bcm) respective to the value of gas it received over January-February this year (5.2 bcm), but calculated at a price of USD 315/tcm.