Gas price for Ukraine could hit $200 per 1,000 cu m in 2008

The price of natural gas for Ukraine could rise to $200 per 1,000 cubic meters from 2008, if Turkmenistan hikes its gas export price by 30%, a Ukrainian newspaper said on Monday, according to RIA Novosti.

From early 2006 Ukraine paid an average of $95 per 1,000 cu m for a mixture of Turkmen and Russian gas supplied at the border. After the Central Asian state raised its gas price, the rate for Ukraine was increased to $130 per 1,000 cu m from January 1, 2007.

"At talks with the Russian side, Turkmenistan on Friday raised the issue of increasing gas purchase prices by at least 30% as soon as 2008. According to Gazprom CEO Alexei Miller, the Russian gas monopoly has not yet given a final answer to the Turkmen side, and has taken a pause until next week," Ekonomicheskiye Izvestiya reported.

Turkmenistan supplies about 50 billion cu m of gas annually to Russia at $100 per 1,000 cu m under a 2006-2009 deal signed by Gazprom and the Central Asian state`s late leader Saparmurat Niyazov.

Ashgabat argues that Russia has also been raising energy prices for ex-Soviet republics and has pointed to rising gas prices on global markets. The average gas price for Europe is expected to hit $360 by the end of 2008.

"Ukraine is traditionally a key market for Turkmen gas, and Ukraine`s requirements for gas imports are even higher than the volumes of Turkmen gas deliveries under the contract with Gazprom, while prices are several times lower than in Europe.

Obviously, the adaptation of the Ukrainian economy to the European price level will require time. And we need to assess the consequences of Turkmen gas price hikes," the paper quoted Miller as saying.

A source close to the negotiations being held in Moscow between Russia and Turkmenistan said the 30% price increase by Turkmenistan would be ruinous for Ukraine, which would have to pay $200 per 1,000 cubic meters while the ex-Soviet republic is prepared to pay $160.