20th Jan 2009 11:45
Press Release
20.01.2009
Moscow
Russia Starts Gas Supplies to Ukraine
Today, at 5:50 a.m., Gazprom forwarded the first transit request to the Unified Dispatching Division of Naftogaz Ukraine ("UDD") for 99.2 mln cubic meters of gas per day from 10:00 a.m. via Gas Measuring Station Sudzha that had been put under the working pressure starting with January 13.
After specifying the requests from European and Ukrainian consumers, the second request to the UDD for supply to Ukraine was made for 423.8 mln cubic meters of gas per day (the second request has incorporated the first one): of them, 348.8 mln cubic meters via all the main Gas Measuring Stations at the entry and exit points of the Ukrainian Gas Transportation System, 75 million cubic meters - to Ukrainian consumers.
At 10.05 Ukraine began transiting Russian gas to Europe that initially was coming from the Sudzha Gas Measuring Station. At 11.10, after Ukraine's approval of the second request, there began gas supplies for Ukrainian consumers and via other gas measuring stations.
Transit of Russian gas to Europe through Ukraine and supply of gas to Ukrainian consumers started pursuant to the arrangements reached by Vladimir Putin, Head of the Russian Government, and Yulia Timoshenko, Prime Minister of Ukraine late at night on January 18. The arrangements envisage that starting with 2009 these two countries will move to the generally accepted transparent European pricing rules in the area of gas.
Pursuant to the arrangements reached on January 19, Gazprom and Naftogaz of Ukraine, in the presence of the heads of the governments of Russia and Ukraine, signed new separate long-term contracts for transit of Russian gas to Europe through Ukraine and supply of gas to the consumers in Ukraine. The contracts don't foresee any intermediaries between the companies. The contracts are valid from 2009 through 2018.
The transit contract sets forth that in 2009 there will be preserved the reduced transit rate of USD 1.7 for transportation of 1000 cub.m. per 100 km. In 2009 gas transit through Ukraine will amount to 120 bcm. From January 1, 2010, the transit rate will be market-based and will be calculated under the generally accepted European formula.
In accordance with the gas supply contract with Ukraine, the price of gas for Ukrainian consumers is based on the generally accepted European price formula with the reduction factor of 08. Therefore, in the first quarter of 2009 the price of gas for consumers in Ukraine will amount to USD 360 per thousand cubic meters. The price will be adjusted according to the formula on a quarterly basis. In 2009 total gas supply to Ukraine will amount to 40 bcm. From January 1, 2010, Gazprom will start selling gas to Ukraine at the European market price without any discounts. For the first time in the relations between Russia and Ukraine in the area of gas, the generally accepted European price formula has been applied, which is now in effect for all the buyers of Russian gas. The contract for transit of gas through the territory of Ukraine and the supply contract for Ukrainian consumers were signed for 10 years and are independent of each other. All this creates additional guarantees that disruption of gas transit through Ukraine to European consumers will never reoccur. Ukraine is the last republic of the former USSR with which Gazprom switched to the fully transparent market-based relations in the gas area.
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