Postponement of introduction of market-pricing mechanism in gas relationships

Author: Inga Friedelhaus Section: Major Events of the Month

Issue: November 2008, Vol.3, No. 10

Tags: Timoshenko

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Market-Pricing Delay

Ukraine and Russia have reached an agreement, under which free-market pricing mechanism will be introduced into the gas transactions between the two countries over the next three years, Ukrainian Prime Minister Yulia Timoshenko said in Moscow, after negotiations with Russia. Currently, Ukraine pays $179.5 for 1000 cubic meters of gas. Kiev obviously does not want, and, indeed, cannot, afford the market price for gas — neither this year nor the next year, where $250 is being planned for gas purchase. This is why this postponement is very important for Kiev, especially, given the fact that the current price for Europe is already over $500.