(Reuters) - Ukraine may take Russia to an international arbitration court if the two sides fail to negotiate a new gas supply contract with a lower price, Ukrainian Prime Minister Mykola Azarov said on Dec. 29.
“Ukraine is ready to take this dispute to international arbitration,” Azarov wrote on his Facebook page. “But we would like to try settling it first.”
Azarov’s government has threatened Russia with arbitration in the past, but the threat has never materialized. The sides are due to hold the next round of gas talks on Jan. 15.
Ukraine says the price of Russian gas defined by its current contract with Russia is exorbitant and unfair. It is paying about $400 per thousand cubic meters at the moment and has said a fair price would be within $250.
Previous gas disputes between Kyiv and Moscow briefly disrupted Russian energy firm Gazprom’s supplies to Europe during the New Year holiday season, but both sides have pledged to avert such disruptions this time.
Ukraine depends heavily on Russian gas imports and has been trying to negotiate a lower price for over a year, but the talks have produced no tangible results so far.
As a condition of reviewing the current deal struck in 2009, Moscow insists on getting a stake in the Ukrainian pipelines that transship Russian gas to Europe and are regarded by Kyiv as strategic.
Ukraine wants to reduce the volume of its imports to 27 billion cubic meters (bcm) next year from about 40 bcm in 2011.
“Purchases of Russian gas will be halved from January,” Ukraine’s Energy Ministry quoted its head, Yuri Boiko, as saying on Dec. 29.
“We have warned our Russian partners that our economy cannot withstand such a high gas price and we will switch to our own energy sources … We are switching to our own energy source – coal.”
Gazprom says the 2009 deal, which Ukraine is now challenging, provides for annual gas imports by Kyiv of 33 bcm. Gazprom has said Ukraine is obliged to pay for this quantity regardless of whether it imports that much or not.
