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Thursday, November 09, 2006

Gazprom Refuses to Subsidize Gas Prices for Russia's ex-Soviet Neighbors

Photo: AFP08.11.2006 MosNews - Russia’s natural gas monopoly Gazprom reiterated on Tuesday, Nov.7, that there will be no subsidized natural gas prices for Russia’s ex-Soviet neighbors. The company also threatened to cut gas supplies to Georgia if no contract is signed, but pledged to meet Ukraine’s supply needs. Gazprom is seeking to raise gas prices for members of the Commonwealth of Independent States (CIS), an alliance of former Soviet republics, including Georgia, Ukraine, Belarus, and Moldova, to average European levels of around $230 per 1,000 cubic meters. Alexander Medvedev, who heads the company’s export arm Gazexport, said Gazprom will cut off natural gas supplies to Georgia, and supply gas via Georgian territory for Armenia only, if no contract is signed. Russia and Georgia remain entangled in a diplomatic feud that began in September over Tbilisi’s brief detention of Russian officers on spying charges. Russia has imposed mail and transport bans on its neighbor, deported hundreds of Georgians, and cracked down on “illegal” Georgian businesses. In relation to Ukraine, the Gazprom official said Russia will meet the country’s supply needs in 2007. Russia will supply 55 billion cubic meters of Central Asian gas to the country in 2007 at $130 for 1,000 cubic meters, as stipulated in a deal signed in late October between RosUkrEnergo, the sole supplier of Russian and Central Asian gas to Ukraine, and UkrGazEnergo, the trader’s joint venture with Ukraine’s national oil and gas company Naftogaz. “The volume of gas that must be delivered to Ukraine is known, it is a minimum of 55 billion cubic meters. This volume will meet Ukraine’s minimal needs, while extra deliveries must be covered by separate agreements,” Medvedev said, quoted by RIA Novosti. Russia briefly cut off gas supplies to Ukraine, over a price dispute in the beginning of this year, and Gazprom accused its neighbor of siphoning off Europe-bound gas during the spat. However, since the appointment of pro-Russian Prime Minister Viktor Yanukovych in August, Kiev has managed to limit the 2007 gas price to $130. Medvedev said Gazprom expects Ukraine to meet in full all its commitments on gas transit to European customers, adding that Ukraine’s siphoning off Russia’s natural gas in January reached about 80 million cubic meters a day. The energy giant’s official also stated that there are no “political motives” in Gazprom’s decision-making.

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