USD 95 UNTIL 2011?

At a joint news conference on yesterday, Ukrgaz-Energo and RosUkrEnergo announced they have signed a contract for gas deliveries to Ukraine at $95 per 1,000 cm until 2011. According to Naftogaz’s representatives, 34 bln cm of gas will be supplied to Ukraine in 2006, 58 bln cm in 2007 and 60 bln cm for the following three years. However, according to the contract it is possible to change the price if it no longer reflects market prices.  Concorde Capital: Though the deal looks pretty good on the surface some things are still unclear. First, it is certainly fishy that a legally non-existent company (Ukrgaz-Energo) was allowed to sign this contract – Gazprom said the enterprise would be registered in Ukraine in the near future. Second, the contact does not explain what price or market is meant in the phrase “reflect the market price.” As our January gas report suggested it does not look like this agreement will have the strength to live until summer. WATCH