You're reading: Naftogaz Ukrainy to continue talks with Gazprom on optimization of gas price

National joint-stock company Naftogaz Ukrainy expects to reach a compromise with Russia's OJSC Gazprom in talks on the price of Russian natural gas and guarantees of gas transit through Ukraine, Naftogaz CEO Yevhen Bakulin has said.

The public relations department of Naftogaz Ukrainy reported that he stated this at the ninth Russian Petroleum and Gas Congress held in Moscow on June 21-23, 2011.

Bakulin said that the price of natural gas calculated using a formula stipulated in contracts signed by the previous Ukrainian government is set too high, adding that the optimization of the price formation for imported natural gas is the key task of the state holding.

As reported, the Russian-Ukrainian gas contracts for the period to 2020, signed in January 2009, states that the price of imported Russian gas is calculated according to a formula that takes changing prices for fuel oil and gasoil for the previous nine months into account. A base price of $450 per 1,000 cubic meters was selected, which Ukrainian experts say is way about the price of gas for European consumers, even though Ukraine does not pay a transit fee.

Ukraine proposes to amend the contract in part of changes in the basic price of gas, include discounts depending on the volume of purchased gas and seasonal discounts to the contract. In addition, it is proposed to amend the formula for the calculation of the price of gas for Ukraine, which today is pegged to the price of gasoil.

Naftogaz unites the country’s largest oil and gas producers. It is Ukraine’s gas transit and underground storage monopolist. It also holds a monopoly in oil transportation by pipelines across Ukraine.