The base price for Russian natural gas is still disadvantageous for Ukraine despite a new deal reached last April and the Kiev government will press Moscow to bring it down, Ukraine’s prime minister claims.

“We have set as a goal a revision of the extremely unfavourable agreement with the Russian Federation and we will continue to try to convince our Russian partners of the need to do this,” Prime Minister Mykola Azarov told a cabinet meeting.

A January 2010 agreement between Russian gas giant Gazprom and Ukraine’s gas holding Naftogaz set a base formula for the price of Russian gas which the Ukrainians say is onerous despite a subsequent deal in Kharkiv last April.

In that deal, President Viktor Yanukovich’s administration secured of $100 discount on the price for 1,000 cubic metres of gas in exchange for allowing Russia to keep its Black Sea fleet in a Ukrainian port until 2042.

But it is now saying that this is not enough.

Azarov said his government would work to persuade the Russian side that the January agreement, reached by the previous administration of Yulia Tymoshenko, was unfair.

“This formula continues to weigh on us and this is a fact that can not be denied. The price goes up by $25 every quarter,” Azarov said.

He said that in the fourth quarter this year the price of gas without the $100 discount would reach $390 tcm. “Such a price would mean catastrophe for the economy and the people of Ukraine,” Azarov said.

Under pressure from the IMF which has just opened up a $15bn stand-by credit line to Ukraine, the Azarov government has announced austerity measures including a 50 percent rise in the price of gas for the Ukrainian householder.

Yanukovich has said that his administration will launch a campaign to explain to people the need for tough reforms to modernise the economy.

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