Yanukovich Sure Of $130 Gas Price In 2007.

Viktor Yanukovich, prime minister, said he expected gas imports in 2007 would cost $130/tcm at the Russia-Ukraine border, up from the current price of $95/tcm but down slightly from the forecast of $135/tcm in the draft 2007 budget. Although negotiations have not been completed and no agreement has been signed, Yanukovich said “there are grounds” for his new $130 price forecast and he had already ordered officials to revise the draft budget. Tom Warner: The $130 price looks to be all but agreed. The price is at the bottom of the range of our recent forecast ($130-140/tcm, see our note of Sept. 7) which indicates that Yanukovich’s government has had to promise some favors to Russia, but nothing too dramatic. We can’t rule out a link with the breakdown in the Cabinet’s relations with the pro-western president and his Our Ukraine party. As for Gazprom’s desire to gain some stake in managing Ukraine’s gas pipeline network, it appears nothing major will happen soon, but nonetheless Russia sees events developing in its favor. The additional $35/tcm will add just over $1.9 bln to Ukraine’s import costs in 2007 and push the current account balance, which has been in the black on a monthly basis since June, back into the red.