Natural Gas Price Talks
// Prime Minister Fradkov gives Belarus a discount on his way to meet his Ukrainian colleague
Agenda
Russian Prime Minister met with Ukrainian Prime Minister Yury Ekhanurov yesterday in Moscow to discuss the price of natural gas. It was their first meeting since Fradkov demonstratively cancelled his trip to Kiev on November 23. Ekhanurov was accompanied by Ukrainian Minister of Fuel and Energy Ivan Plachkov and Naftogaz Ukrainy head Alexey Ivchenko. Fradkov brought Russian Industry and Energy Minister Viktor Khristenko and Gazprom deputy chairman Alexander Ryazanov with him. They were unable to reach any agreement on the price of natural gas to Ukraine in 2006 or the price of gas transit to Europe. But Fradkov promised Belarusian Prime Minister Sergey Sidorsky gas for Belarus for 2006 at a price of $46.68 per 1000 cu. m., in exchange for giving Gazprom control of 50 percent of the gas transporter Beltransgaz.
The lack of results in the prime ministers' negotiations disappointed everyone. “We are not on the level of relations today to decide the issue with the deputy chairman of Naftogaz,” official Gazprom spokesman Sergey Kupriyanov noted. A source close to the negotiations said that Ekhanurov repeated proposals already rejected by Moscow. These include raising the cost of gas from $50 to $90 for 1000 cu. m. and raising the price of gas transit to Europe to cover the increased expense, or raising the price of gas from $50 to $210-230 per 1000 cu. m. with an option to buy additional gas (up to 8 billion cu. m.) from Turkmenistan for a price considerably less than $60 per 1000 cu. m. It cannot buy gas from Turkmenistan without Russia's agreement, since Russia controls the entire design capacity of the pipeline in Uzbekistan and Kazakhstan. Gazprom is insisting, as phrased by Kupriyanov, that “in 2006, we will use not specific numbers but a price formula that will completely correspond to those formulae that we work with in Eastern and Western Europe. We will orient ourselves to the same parameters tied to the cost of alternative forms of fuel.” In other words, the price of gas for Ukraine “should rise from the present $50 per 1000 cu. m. to $210-230.”
Meanwhile, Fradkov provided Sidorsky with 21 billion cu. m. of gas at $46.68 per 1000 cu. m. at a meeting just before he saw Ekhanurov. Officially, it was a meeting of the Council of Minister of the Union of Russia and Belarus, but the topic of the meeting was also gas. In return, Sidorsky promised to fulfill the 2003 agreement to transfer control of 50 percent of Beltransgaz to Gazprom. That deal had been held up because of differences over the price for the shares. Gazprom offered $600 million, while Belarusian President Alexander Lukashenko insisted on a price of between $1 billion and $2 billion. Participants in the negotiations reused, even unofficially, to disclose the price agreed on yesterday.
Petr Netreba, Natalia Grib
All the Article in Russian as of Dec. 20, 2005
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