Ukraine Vows Retaliation If Russia Hikes Gas Prices In 2009

Ukraine warned Friday it would raise its fees on Russian gas shipments through its territory and on underground storage services if Russia abruptly hiked gas prices in 2009.
Τρι, 17 Ιουνίου 2008 - 03:42

Ukraine warned Friday it would raise its fees on Russian gas shipments through its territory and on underground storage services if Russia abruptly hiked gas prices in 2009.

"Be confident that Ukraine will have a strong asymetric response if there is a question of imposing European price levels and if there is a willingness to introduce them immediately, starting from Jan. 1, 2009," Olexander Chaly, a deputy assistant in the Ukrainian president's office, told a press conference.

He said such "market conditions would also apply to all other components of the gas trade, notably transit and storage."

Russia on June 6 said it would double the present amount that Ukraine pays for gas from next year as a result of the higher costs of acquiring the gas from Central Asia.

Although Russia holds massive gas reserves of its own beneath its vast Siberian expanses it also imports large amounts of gas from Central Asian neighbors due to a lack of investment in developing its own reserves.

In March, Central Asia's main producers, Kazakhstan, Turkmenistan and Uzbekistan, said that they would charge Russia "European" prices - almost double current levels - starting from 2009.

Ukraine currently pays Russia $179.5 dollars per thousand cubic meters of gas.

Last month, the head of Ukraine's Naftogaz, Oleg Dubina, said Ukraine would only be ready to pay European prices in five years' time.

An energy price hike imposed by Russia would put further pressure on Ukraine's overheating economy, which is struggling under soaring inflation that saw consumer prices climb 30% in the year to April.

Gas has long proved a sticking point in relations between Russia and Ukraine, which since Yushchenko's election in 2005 has tried to reorient its foreign policy from Russia towards the West.

A price dispute in 2006 saw Russia briefly cut off all of Ukraine's gas, causing disruption to supplies to the European Union, which relies on Russia for a quarter of its supplies.