BELARUS NEWS AND ANALYSIS

DATE:

13/10/2008

Gazprom addresses status of calculations of Belarus and Ukraine in gas area

Gazprom Management Committee considered the status of calculations and potential relations with business enterprises of Belarus and Ukraine in the gas area.

The core business divisions were entrusted with continuing a stagewise bringing of natural gas prices supplied to Belarus to the level adopted in west European gas markets. The Management Committee also prescribed to take necessary measures aimed at settling indebtedness for natural gas delivered to Ukraine and continue the work of transiting to a new relationship scheme with Ukraine in the gas sector and a stagewise shifting to market gas prices for consumer, having arranged for negotiations and preparation of the relevant contracts with due consideration of the Memorandum of cooperation in the gas sector signed by Prime Ministers of Russia and Ukraine.

Background:

On December 31, 2006 Gazprom and Beltransgaz signed the Gas Supply & Transit Contract for 2007 through 2011. The Contract in particular fixed the pricing formula starting from January 1, 2008 (which is in line with the Russian gas supply pricing formula for Europe), as well as the discounts for the market price for 2008-2010 (0.67, 08 and 0.9 respectively). Starting from 2011, Belarus will have gas prices equally profitable for Gazprom versus prices of gas delivered to Europe.

Gas delivered by Gazprom in 2007 and the first half of 2008 has been paid by Beltransgaz in full.

In May 2007 Gazprom and the State Property Committee of the Republic of Belarus signed the Purchase and Sale Agreement for a 50 per cent stake in Beltransgaz. At present, Gazprom holds a 25 per cent stake in the company.

Pursuant to the January 1, 2006 Accord on settling the issues of cooperation in the gas sector entered into by ROSUKREENRGO AG, Gazprom and Naftogaz, ROSUKREENRGO was named as a company responsible for natural gas supplies to Ukraine.

In conformity with the Agreement to develop the relations in the gas sector signed between Gazprom and NAK Naftogaz Ukrainy in March 2008, Ukraine will be supplied during the current year with gas from Central Asia in the amount of no less than 55 bcm priced at USD 179.5 per 1,000 cu m. NAK Naftogaz Ukrainy is currently a gas purchaser on the border with Ukraine.

According to the Agreement starting from May 1, 2008 gas supplies to Ukrainian industrial consumers in the amount of 7.5 bcm have been effectuated by Gazprom sbyt Ukraine (a wholly owned subsidiary of Gazprom).

On October 2, 2008 in the course of the meeting between the Russian Federation Prime Minister Vladimir Putin and his counterpart, Julia Timoshenko the Memorandum of Cooperation in the gas sector was signed. One of the key provisions of the Memorandum is a possibility to transfer to direct long-term relations between Gazprom and NAK Naftogaz Ukrainy, starting from January 1, 2009. The Memorandum also confirms the intention to establish a stagewise (during three years) transition to market, economically expedient and mutually agreed gas prices for Ukraine, as well as tariffs for gas transit across its territory. - Gazprom

Source:

http://www.oilandgaseurasia.com/ru/news/p/0/news/2963

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