Ukraine and Russia End Gas Price Impasse

Russian state-run gas company Gazprom has agreed to cut gas prices for Ukraine.
Ukraine and Russia End Gas Price Impasse
General view of Russian natural gas giant Gazprom's headquarters in Moscow. Gazprom has agreed to cut gas prices for Ukraine, ending the deadlock between the two countries. (Yuri Kadobnov/AFP/Getty Images)
4/17/2010
Updated:
10/1/2015
<a><img src="https://www.theepochtimes.com/assets/uploads/2015/09/gaz71267773.jpg" alt="General view of Russian natural gas giant Gazprom's headquarters in Moscow. Gazprom has agreed to cut gas prices for Ukraine, ending the deadlock between the two countries. (Yuri Kadobnov/AFP/Getty Images)" title="General view of Russian natural gas giant Gazprom's headquarters in Moscow. Gazprom has agreed to cut gas prices for Ukraine, ending the deadlock between the two countries. (Yuri Kadobnov/AFP/Getty Images)" width="320" class="size-medium wp-image-1820971"/></a>
General view of Russian natural gas giant Gazprom's headquarters in Moscow. Gazprom has agreed to cut gas prices for Ukraine, ending the deadlock between the two countries. (Yuri Kadobnov/AFP/Getty Images)
KIEV, UKRAINE—Russian state-run gas company Gazprom has agreed to cut gas prices for Ukraine, ending the deadlock between the two countries.

The head of Gazprom Aleksey Miller and the Ukrainian energy and fuel minister Yuriy Boyko came to an agreement on Friday, with the formal procedures to be completed when the two presidents, Victor Yanukovych of Ukraine and Dmitry Medvedev of Russia, meet in the former Ukrainian capital of Kharkiv on Tuesday.

No specifics have yet been released on what the new price for consumer gas will be, or on what Ukraine offered Russia in exchange for the deal.

Ukraine had tried several times since Yanukovych came to power in February to negotiate an agreement, but the neighbors were at a stalemate. A statement from the Russian government on Friday said that the deal was based on a proposal offered by Yanukovych.

Both Russian and Ukrainian media, which have close relationships with their respective governments, have speculated on the details of the trade-off, with possibilities including the creation of a gas syndicate with Europe and Russia, allowing Russia to participate in Ukraine’s nuclear energy program, giving Russia an oil refinery in Kremenchug and allowing Gazprom to rent underground gas storage facilities in Ukraine.

Earlier, Ukrainian officials had said that gas prices should decrease to $240-$260 for 1,000 cubic meters, down from $330 being paid in the year’s second quarter and below the $305 paid in the year’s first quarter.

The previous agreement between the two countries was reached in January 2009 by Yulia Tymoshenko’s administration, following a gas conflict that left Eastern European consumers without Russian-supplied gas for two weeks during the cold winter. At the time, Tymoshenko signed a 10-year agreement, which Yanukovych has sought to renegotiate.

According to Kiev, high gas prices made it tough for the government to pass a state budget. Lower prices should allow the budget to pass and Ukraine to resume its frozen relationships with the International Monetary Fund—a high priority for Ukraine’s ailing economy.