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Ukraine: Will pay Russian gas bill on time
by Staff Writers
Yalta, Ukraine (UPI) Sep 19, 2011

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Ukrainian Prime Minister Mykola Azarov says his country will pay its natural gas bills to Russia on time, thus avoiding a winter European supply shutdown.

Azarov gave reassurances Saturday that despite the "disadvantageous" terms of Ukraine's 10-year contract with Russian energy company Gazprom, which ties natural gas prices to oil prices, Ukraine's Naftogaz will pay its bills to its Russian counterpart on time.

About 80 percent of Russia's Europe-bound gas passes transits Ukraine. A pricing dispute and unpaid debt between Russia and Kiev in 2009 led to a brief shutdown of European gas supplies by Gazprom, causing widespread consternation in European markets.

"The gas contracts are disadvantageous, but we (will) fulfill them ... and will pay until we manage to change the contract," Azarov said at a news conference in Yalta, Ukraine, RIA Novosti reported.

Kiev is lobbying for a better gas deal with Russia. Ukraine has complained the current price of $354 per 1,000 cubic meters is far too high and that it will likely pay even more in the fourth quarter -- perhaps as much as $400 -- due to rising oil prices.

Ukrainian Energy Minister Yuriy Boyko told the Kiev television channel Inter Saturday Russian natural gas should be standing at $230 per 1,000 cubic meters. He contended Ukraine is paying more than other European countries at that price.

But, like Azarov, he gave assurances the gas price wrangling between Russia and Ukraine wouldn't disrupt Russian gas deliveries during the coming winter as was the case in 2009, RIA Novosti said.

Azarov said last week the government would dissolve Naftogaz and revise arrangements it already has with Russia. Gazprom had wanted to merge with Naftogaz, a move the Kremlin said would benefit Ukraine's recession-battered economy.

Azarov said Naftogaz could split into three separate entities as part of a restructuring set for October.

"Naftogaz will be restructured to emerge as a completely transparent natural gas production company," he said. "If Russia decides to be part of this venture -- it is welcome."

Ukraine's 10-year gas export contract with Russia, signed in 2009, has resulted in a trial on abuse-of-office criminal charges against former Prime Minister Yulia Tymoshenko, who signed the deal.

Tymoshenko's attorneys last week moved to reopen the Kiev Pechersk District Court's pre-trial investigation into her case. Attorney Oleksandr Plakhotniuk told Ukraine National Radio the court didn't include exculpatory evidence that contradicts prosecutors' assertions Tymoshenko acted recklessly, depriving the defense of being able to refer to the materials in court proceedings.

The court has recessed the case until Sept. 27.

Agreements between Naftogaz and Gazprom on boosting gas supplies were reflected in a big jump in the levels of gas imports in the first seven months of the year, Ukrainian government numbers indicate.

The State Statistics Department reported total imports jumped 73.1 percent compared to the earlier year, to 30.7 billion cubic meters of gas. Gas imports from Russia rose 62.1 percent to 28.7 billion cubic meters -- $8.6 billion in monetary terms.

The big purchases allowed Ukraine to save money because gas prices were higher later in the year and are expected to go even higher in the fourth quarter as winter nears.

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