Ukraine, one of Russia's biggest gas customers, plans to slash imports from its ex-Soviet neighbour by 25 percent next year, Prime Minister Yulia Tymoshenko was quoted by news agencies as saying on Thursday. The proposal would halve Ukrainian imports of Russian gas from levels seen in previous years, dealing a further blow to Russian gas export monopoly Gazprom as it tackles lower prices and depressed exports to western Europe.
"Given that we have bought 33 billion cubic metres of Russian gas this year, next year we will take 25 billion cubic metres," news agencies quoted Tymoshenko as saying in the western Ukrainian city of Lviv. Kiev and Moscow have often rowed over gas prices and supplies, including the transit of Russian gas across Ukraine, and such a dispute led to gas supplies to Europe being severed for more than two weeks in January. Gazprom declined to comment on Tymoshenko's remarks.
"It will be hard for Gazprom to swallow, as it expects to boost its sales abroad. Still, Gazprom can't do much about this as there is no agreement with Ukraine on volumes for next year," RusEnergy analyst Mikhail Krutikhin said. Ukraine's economy is expected to shrink by between 14 percent and 15 percent this year. While this has stretched its ability to pay Russia for gas, it has also reduced the country's requirements as steel and fertiliser production has dropped.
"Ukraine's economy is feeling the effects of the economic crisis and so far there are no signs of any growth in gas demand," said a Naftogaz spokesman. "The question of gas supplies and prices will be discussed in talks with Gazprom." Industrial production in Ukraine has fallen about 30 percent year-on-year in the first seven months of 2009, though July data showed a 5 percent rise when compared with the preceding month.
Ukraine imported 49 billion cubic metres (bcm) of gas last year at $179.50 per 1,000 cubic metres. It paid $8.6 billion in total, representing almost 7 percent of gross domestic product. After the January row with Russia, Ukraine agreed to pay the market price for gas with a 20 percent discount. Prices are set quarterly - Kiev now pays $198.34 per 1,000 cubic metres, far lower than the $360 it paid in the first quarter. Ukraine is also trying to reform its Soviet-built infrastructure and heavy industry to make consumption more efficient.
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