STATEMENT of the Chairman of NJSC «Naftogaz Ukraine» Oleg Dubyna

The statement of the Russian party as for the price for natural gas for Ukraine, starting from January of 2009, in amount of $418US per 1000 cubic meters - violates all agreements set out in the Memorandum made between the Government of Russian Federation and Ukrainian Cabinet on Cooperation in the gas sphere as of October 02, 2008 as well as the Agreement between NJSC «Naftogaz of Ukraine» and «Gazprom» JSC on the principles for the long-term cooperation in the gas sphere signed in October, 2008.

Such a price for natural gas as for Ukrainian consumers is an unprecedented economic pressure, it blocks the work of not only industrial and communal enterprises but also the operation of the gas transport system and in the end of the day can lead to ecological and humanitarian catastrophe.

The joint statement of the president of Ukraine V.Yuschenko and the prime Minister of Ukraine Yu.Timoshenko made on 31th December 2008 provides the results of calculation, made on the basis of the terms and conditions of the Memorandum as of 02.10.08, showing that at the beginning of 2009 the price for the Russian natural gas on Russian-Ukrainian border shall be $201US /1000 c.m, at the transit fee not less than $2US for 1000 c.m per 100 km. The Government of Ukraine offers, until relevant agreements achieved and proper contracts signed, to temporally adhere to the existing between NJSC «Naftogaz of Ukraine» and «Gazprom» JSC technological and pricing parameters with subsequent adjustment thereof for a period starting from 01.01.09 in compliance with the contracts that will be signed for the year 2009.

Considering the tendencies of the European energy market, in the process of negotiations the Ukrainian party considering the fall of oil prices, had offered to maintain the terms and conditions for gas supplies as well as the payments for transit services at the level of 2008, i. e: the gas price for Ukraine - $179.5US per 1000 c.m and the rate for transit services - $1.7US for 1000 c.m per 100 km; however, such offer has not been accepted by the Russian partners. Nevertheless NJSC «Naftogaz Ukraine» is ready to carry out the transit and buy gas subject to recalculation provided in aforesaid joint statement.

At the same time, to date, the valid documents regulating the gas sphere ratified by Ukrainian Parliament (Ukraine’s Laws as of 15.11.01 #2796-111 and #2797-111), are the Agreements between the Cabinet of Ministers of Ukraine and the Government of Russian Federation as of 1994, 2000 and 2001. In order to fulfill the Agreement as of 2001, the Intergovernmental annual protocols were signed. These protocols included the transit volumes of Russian natural gas through Ukraine, fees for the transit services, transit services payment procedure stipulating the settlements by cash and with relevant volumes of gas.

Taking into account that for the last few years there were no Protocols signed, based on the international legal practice, the terms and conditions of the Protocol dated 2005 are to be considered legitimate, providing for delivery of 23 bcm in payment for transit services and reimbursement of advance payment amounting to $250 million, received by NJSC «Naftogaz of Ukraine» earlier (equivalent of 5 bcm of natural gas). In 2009 the Company believes it is possible to keep on working on the basis such parameters, and starting from 2010 to switch over to supplies of 28 – 29 bcm of natural gas yearly in payment for transit services.

The company believes it is necessary, legally justified and possible to presently go back to such working procedure and considers that «Gazprom» JSC is under an obligation to include into the daily gas volumes pumped into Ukrainian gas transport system intended for European countries (296,2 million c.m per day) another 63 million c.m of natural gas per day for Ukrainian consumers. The company is ready to carry out transit subject to obligations for provision of services on account of the advance payment.

In order to maintain Ukraine’s natural gas balance, NJSC «Naftogaz of Ukraine» is ready to purchase from «Gazprom» JSC the volumes currently being in short, i.e. 13 - 23 bcm of natural gas.

The Ukrainian-Russian negotiations are constantly going on and Ukrainian delegation is ready at any time to come to Moscow to sign mutually beneficial contracts.


Press-centre NJSC «Naftogaz of Ukraine»

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