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Ukraine halves imports of Russian gas

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July 6, 2011, 11:38 a.m. | Business — by Interfax-Ukraine
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Moscow, July 6 (Interfax) – National joint-stock company Naftogaz Ukrainy has reduced the amount of gas it imports from Russia by about 50% in July compared with June, according to data from Russia's Fuel and Energy Central Dispatch Service. Ukraine imported 128 million cubic meters (mcm) of Russian gas a day on average in June.

The maximum for the month was 146 mcm. But volumes fell to 80.7 mcm on July 1, to 76.4 mcm on July 2 and to 66.9 mcm on July 3.

Ukraine had imported 28.969 billion cubic meters (bcm) of gas from Russia in 2011 as of July 3, 13.826 bcm or 91.3% more than in the same period last year.

It plans to import 40 bcm this year.

Ukraine deliberately bought more gas in the first half because the price will rise in the second half.

It paid $264 per 1,000 cubic meters for imported gas in the first quarter and $297 in the second.

The price rose to about $356 in the third quarter and could reach $400 in the fourth.

The price is calculated based on the price of fuel oil and gas-oil on world markets with a nine-month lag.

Ukraine is trying to negotiate a lower price for Russian gas.

However, at a meeting on Tuesday with Ukrainian Energy and Coal Industry Minister Yuriy Boiko, Gazprom CEO Alexei Miller said the price would only be lowered if Gazprom and Naftogaz Ukrainy merge.

"I can't say anything new. The issue of adjusting the price of gas for our Ukrainian friends could be examined given the merger of Gazprom and Naftogaz Ukrainy," Miller is quoted as saying in the press release issued after the conclusion of the talks.

Under the gas contract between Gazprom and Naftogaz Ukrainy that was signed in January 2009, Naftogaz agreed to buy 52 bcm a year beginning in 2010.

It can import less, but under the contract's take-or-pay provision, Ukraine must pay for a minimum of 80% of that volume, regardless of the actual amount taken.

The contract provides for the basic volume to be amended down to 41.6 bcm, but the change must be agreed before July 1 of the preceding year.

The change would reduce the take-or-pay threshold to 33.3 bcm.
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