Ukraine and Europe agree over Russian gas price deal

Ukraine and the European Commission have reached a joint position on an interim price Ukrainian oil and gas incumbent Naftogaz should pay for Russian gas, ahead of Tuesday’s round of trilateral talks with Russia, Naftogaz said in a statement on Monday afternoon. However no details were released on what the agreed price should be.

The news of consensus with the EU is the first time since Russia stopped supplying Ukraine with gas from June 16 that Ukraine has been in agreement with the EU over the price it should pay for gas.

A spokeswoman for the European Commission declined to comment on Naftogaz’s statement on Monday.

An interim agreement is needed for Gazprom to resume supplying gas to Ukraine until a more permanent decision is made over the price of Russian gas to Ukraine in the Stockholm arbitration court, which is not expected until after winter.

“Representatives of the commission and Ukraine reached a consensus on the fact that the negotiations should result in an interim agreement which would guarantee the supply of Russia’s gas to Ukraine as well as a stable flow of transit gas to the EU this winter. Such an agreement should contain clear-cut guarantees of the supply of agreed gas volumes by Gazprom, on the one hand, and a guarantee of payments for the supplied gas by Naftogaz, on the other,” the statement from Naftogaz said.

The agreed position of both parties includes signing of binding documents between Naftogaz and Gazprom which would eliminate the possibility for any party to change conditions.

A spokeswoman for Naftogaz said they would not provide further information on detailed terms of the deal, including a price, before negotiations on Tuesday.

Russian prime minister Vladimir Putin was quoted on global news wire Reuters as saying a deal for gas supplies over winter had been reached on Friday. However an agreement will not be made official until final negotiations are held on Tuesday in Brussels between the three parties.

The statement was published after the EU’s energy commissioner Gunther Oettinger met with the Ukrainian prime minister Arseniy Yatsenyuk, energy minister Yuriy Prodan and Naftogaz CEO Andriy Kobolyev on Monday.

The EU has previously proposed an interim agreement where Ukraine would have to pay Gazprom $3.1bn (€2.4bn) by the end of the year in two instalments. Russia has offered Ukraine a discount of $100 per thousand cubic metres.

Last month Ukraine’s energy ministry outlined any deal needs to include:

• formation of a gas price based solely on market principles rather than political ones that would be fixed in a supply contract

• amending the transit agreement for Russian gas to Europe in line with EU and Ukrainian legislation and the Third Energy Package, which would eliminate the current discriminating restrictions imposed on the Ukrainian grid operator Ukrtransgas. This should result in providing Ukrainian incumbent Naftogaz with free access to European markets

• and coordinating schedules of payments for previous gas supplies and agreeing on conditions for future supplies, including the take-or-pay clause. Miriam Siers and Martin Degen