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 Putin fears that Russia’s gas price for Ukraine will be too low

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Russian President Vladimir Putin believes that gas discounts for Ukraine should make the price comparable to those for Ukraine’s neighboring countries.

He said this at a meeting with Head of Gazprom Alexei Miller last night, Censor.NET reports citing UNIAN.

"As for the discounts, they must be implemented in such a way that the price for Ukraine is comparable to regional prices, I mean countries neighboring with Ukraine," Putin said.

"Let us take as a premise that our partners [should] feel some confidence in our intentions, keep normal business relationship. And - of course, we've never done this - that they have the confidence that we will not do so in the future: [that we] will not use our economic ties as some leverage in dealing with other issues that are not related to the economy. Therefore, let yourself be guided by adherence and strict compliance with all the requirements of the 2009 contract, of course," he added.

Read also: Gazprom curbs its presence in Europe, sources say

In turn, Miller said that effective April 1, the new price for Russian gas supplies to Ukraine is $247.18 per 1,000 cbm. This is the discounted price provided by the government of the Russian Federation at expense of duty fees.

"The decision was made for a period of three months, although Ukraine had requested a discount for a longer period," Miller said.

According to him, the decision about a three-month term is due to high volatility of the gas market.

"We understand that the trends in today's oil market can dramatically change and, in principle, further worsen in terms of reduction. Such risks exist, therefore the decision on the volume of discount can ultimately be made only in relation to the actual price rates that will emerge in the next quarter. Otherwise there is a risk that the price for gas supplies to Ukraine will be lower than the spot price, and well below the price for countries neighboring with Ukraine," Miller said.

Read also: Ukraine signed new agreement for purchase of gas in Russia: the price will be $248

He also recalled that Gazprom abandoned the ToP (take or pay - ed.) principle for Ukraine. Putin agreed with the decision.

"I agree, considering the difficult state of the Ukrainian economy, that we need to meet our partners halfway. And one more thing: it is necessary to ensure an uninterrupted supply to all partners, including the south-east of Ukraine," Putin said.

Read also: Medvedev approved granting discount on gas for Ukraine until June 30

Earlier, Naftohaz Ukrainy National Joint Stock Company and Russia's Gazprom signed a supplementary agreement to the gas supply contract, according to which the effect of the "winter package" was extended until the end of June 2015.

Head of Gazprom Alexei Miller said that Gazprom will not demand the payment of fines under the ToP for the supply of gas in the second quarter of 2015, although earlier Head of the Russian Energy Ministry Alexander Novak claimed that starting April 1, Russia intends to supply gas to Ukraine under the ToP principle, which is incorporated in the contract of 2009.

On April 1, Russian Prime Minister Dmitry Medvedev signed a decree of March 31, #295 on granting Ukraine a discount on gas in the second quarter of this year in the amount of export duties, but not more than $100 per 1,000 cbm.

 
 
 
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