Ukraine's national oil and gas company Naftogaz Ukrainy has confirmed it will live up to its contractual obligations to Gazprom in 2012, and will be negotiating to get the price for gas reduced, Gazprom CEO Alexei Miller told the press in comments on the course of negotiations with Ukraine.
"A concerns Ukraine, we have a valid contract. Our contract is such, and our Ukrainian colleagues understand perfectly well, that the terms of the contract are iron-clad. And if we’re talking about 2012, then Ukraine has confirmed that it will be meeting in full measure the contract obligations that there are, and will be conducting negotiations to somehow get the price adjusted," Miller said.
As to Ukraine’s announcement that it will reduce gas selection of 27 billion cubic meters (bcm) for the year compared with mandatory minimum of 41.6 bcm written into the contract, Miller said, "Ukraine can reduce the amount of gas selected, but there is a ‘take or pay’ provision in the contract, and that is a condition of the contract, and Ukraine knows it."
"But, as the Russian leadership said, Russia, Gazprom, will be acting in a civilized manner," he said.
Ukraine negotiated with Gazprom last year to get a reduction in the price for gas supplied in 2012, and Gazprom expressed concern that Naftogaz Ukrainy would unilaterally announce a reduction in purchases based on 27 bcm for the year, where the contract inked in early 2009 has Naftogaz buying 52 bcm of natural gas per year starting in 2010.
Naftogaz Ukrainy more than doubled its selection of imported gas in the middle of last week as compared to the first half of this month, when it dropped by almost two thirds. Where at the end of last year daily selection was 100-110 million cubic meters (mcm), it had dropped to 33.3 mcm by Jan. 9. The country was taking more than 50 mcm per day from Jan. 5 to 17. From Jan. 18 to 21 it increased to 115 mcm.
Naftogaz is saying it had warned Gazprom in timely fashion about its intention to agree gas deliveries at 27 bcm for 2012. Gazprom response is that the Ukrainian company had let slip the deadline for discussing this year’s gas delivery volume.
