Ukraine?s Tymoshenko Wants Review of Gas Deal with Russia

Yulia Tymoshenko, who is set to return as Ukraine?s Prime Minister, called on Thursday, June 22, for a radical review of Kiev?s current gas deal with Russia. She said that the Russian gas supplies are far too expensive and that the contract infringes on Ukraine?s national interests.

?I think all issues on gas supplies to Ukraine now require further deep revision and review,? she told reporters minutes after three liberal parties overcame differences and agreed to form a coalition government.

As MosNews has reported, Ukraine imports most of its gas from Russia and clashes frequently with its vast neighbor on prices. In January 2006 the two engaged in a price row which culminated in a brief cut-off of gas supplies to Europe, before Kiev accepted a nearly twofold increase in prices. Russia, which delivers up to 80 percent of its gas to Europe via pipelines across Ukraine, has suffered a blow to its reputation as a reliable supplier as a result of this argument.

?Certainly, all new relations with Russia, Turkmenistan, Uzbekistan and Kazakhstan should be built on a friendly basis,? Tymoshenko said, quoted by the Reuters. But her stance on gas looks set to further strain ties with Moscow, as Russia has said it wants to increase the gas prices.

Ukraine pays now $95 per 1,000 cubic meters of natural gas compared with $50 previously. Tymoshenko has repeatedly said the prices should be lower. But Russia?s gas giant Gazprom has said it wants to raise prices again later this year and plans another round of talks for July.

Gazprom finds itself between the devil and the deep blue sea. On the one hand, Ukraine refuses to pay a higher price for the gas it receives and has shown that it won?t bulge at taking the Russian gas going to Europe if Russia turns off its supplies. On the other hand, Turkmenistan, which delivers the vast majority of gas that goes to Ukraine, has said this week that it wants to almost double the price of the gas it sells to Gazprom. Turkmen Foreign Ministry has already released a statement saying that if Gazprom does not agree to raising the price from $65 to $100 per 1,000 cubic meters, the Central Asian state will simply turn off the supply altogether. If Gazprom agrees to Turkmenistan?s conditions, it will have to raise prices for Ukraine, because otherwise it will be working at a loss.

The situation is made more difficult because for now Gazprom has no alternative export routes to Europe. The Russian gas
monopoly began construction of the North European Gas Pipeline which is set to bypass all transit countries, but it won?t be completed for another few years. For now Russia and Gazprom has to come to amends with Ukraine or risk disruptions to their European-bound deliveries.

Europe gets around a quarter of its gas from Russia.