controlled natural gas monopoly OAO Gazprom and Ukraine on Thursday announced an agreement on gas deliveries for the rest of the year, apparently putting an end to a dispute that had been watched nervously in Western Europe. The agreement, according to a statement from Gazprom, specified prices for future deliveries and for gas delivered in the first two months of this year. The announcement comes after talks between Gazprom President Alexei Miller and Oleh Dubina, head of the Ukrainian natural gas company Naftogaz. The Russian company previously cut shipments by up to 50 percent for several days last week. That reduction caused anxiety in Western European countries that get much of their Russian gas by pipelines that cross Ukraine. However, no downstream supply problems were reported. The agreement takes a step toward streamlining the complicated gas trade with Ukraine, where supplies come from several countries and have gone through a web of intermediary companies that critics say are essentially mechanisms for siphoning money into private pockets. Ukraine buys gas both from Russia and from former Soviet Central Asian states; all the gas is delivered to Ukraine in pipelines controlled by Gazprom. Previously, the gas has been purchased from RosUkrEnergo, a middleman company half-owned by Gazprom, and then resold to UkrGazEnergo, another intermediary, which delivered some of the gas itself and sold the remainder to Naftogaz. However, the new agreement specifies that from now on “the purchaser at the border with Ukraine will be Naftogaz.” The statement did not specify whether RosUkrEnergo will continue to be involved in the trade. Gazprom officials could not immediately be reached for clarification, but Naftogaz spokesman Valentyn Zemlyansky told The Associated Press that “the fate of RosUkrEnergo is the subject of contuining negotiations.” The agreement says Ukraine will pay $179.5 (¤117) per 1,000 cubic meters for Central Asian gas, but will pay nearly double that amount - $315 (¤205) - for Russian-origin gas that was delivered in the first two months of this year. It also says Gazprom-affiliated companies will be guaranteed sales of at least 7.5 billion cubic meters of gas to Ukraine's industries in April-December. That gives Gazprom a direct foothold to about a quarter of the most profitable section of the Ukrainian market where payment is more reliable and more solvent than home customers, who are notorious in Ukraine for avoiding bills. “This is a big improvement for both Gazprom and Ukraine. Common sense prevailed. Any solution that avoids a disruption of European supplies is positive, but this appears to suggest that relations between the two in the future will be much more transparent than they have been,” said Geoffrey Smith, deputy head of research at the Renaissance Capital investment bank in Kiev. However, the agreement notes that negotiations on prices for next year are continuing, hinting that Ukraine faces a significant hike in 2009. Gazprom announced this week that it had reached agreement with Turkmenistan, Kazakhstan and Uzbekistan to purchase gas next year at “European prices,” which Gazprom has said are expected to be around $350 (¤227) per 1,000 cubic meters. __
