Russia willing to offer Ukraine gas discounts: Minister

Russia’s energy minister has expressed Moscow’s willingness to offer gas discounts to Ukraine on a quarterly basis, insisting, however, that the price formula under the current contract with Kiev should remain.

Following tripartite gas talks in Brussels between Russia, Ukraine and the EU Commission, Alexander Novak said Friday that Moscow “believes that the current contract and the price formula should not be subject to change until the expiration,” RT reported.

“The existing contract envisions the possibility of discounts, and the sides use this possibility to regulate contractual obligations,” Novak added, pointing to a 10-year gas deal signed in January 2009 between Russian energy giant Gazprom and Ukraine’s Naftogaz.

Ukrainian government is currently paying $329 per 1,000 cubic meters of Russian natural gas – an undiscounted price brokered by the EU Commission last October. The so-called winter package, however, is set to expire on March 31, 2015.

Citing a volatile gas market, Novak further stated that the signatories to the deal agreed to review the contractual gas price every quarter.

“Since the price formula serves to calculate the price for a long-term period [of 9 months], the price will be reviewed on a quarterly basis,” he said.

As of April 1, “the gas price for Ukraine will be $348 per 1,000 cubic meters,” Novak said, adding that Moscow may consider a $100 discount starting from the second quarter of the year.

The Russian minister had earlier underlined that Moscow may offer Kiev better terms provided that it pays for the gas supplied to eastern Ukraine’s Donbass region.

Meanwhile, the European Commission described the Friday negotiations as “constructive,” confirming that further talks are expected in April.

EU estimates indicate that Kiev would require 4-6 billion cubic meters of gas from Russia by next October to increase its reserves for next winter.

According to the report, Ukraine’s accumulated debt for previous supplies of Russian natural gas has climbed to $2.477 billion.

MFB/MKA/HRB

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