UPDATE 2-Gazprom sends Ukraine new warning over gas price
(Recasts lead, adds Stern interview quotes, background)
MOSCOW, July 8 (Reuters) - Russian gas export monopoly Gazprom (GAZP.MM) said on Tuesday its import bill for purchases from Central Asia may more than double next year.
That is set to lead in turn to the world's largest gas producer demanding a crushing price rise for its exports to Ukraine, gateway to the European market, a leading industry expert said.
Supplier of a quarter of Europe's needs, Gazprom imports gas from the ex-Soviet republics of Turkmenistan, Kazakhstan and Uzbekistan to meet growing demand at home and abroad.
Ukraine relies heavily on purchases of Central Asian gas from Gazprom and 80 percent of the European Union's gas from Russia is shipped across Ukraine. The balance is sent through neighbouring Belarus.
In 2006, a pricing dispute between Ukraine and Gazprom led to brief supply cuts to the European Union, sparking a barrage of political complaints.
"As far as gas prices are concerned, the situation for end users is becoming quite dramatic," Russian agencies and state television channels quoted Gazprom's Chief Executive Alexei Miller as telling Prime Minister Vladimir Putin.
A leading expert on the sector warned on Tuesday that Ukraine could face an unaffordable gas price hike from January 1 of next year, which could damage European energy security.
"Essentially they're going to try to impose a price on Ukraine that Ukraine can't pay," Jonathan Stern, director of gas research at the Oxford Institute of Energy Studies, told Reuters. For the full interview, click on [ID:nHKG16556].
"And I can see that we're sleepwalking towards the end of the year and that price has got to be agreed, and I think we could see a replay of 2006... We could have a major blow-up in January again."
Miller repeated his view to Putin that Gazprom's export prices in Europe will reach $500 per 1,000 cubic metres compared with $400 now as they follow record high oil prices with a lag of six to nine months.
Miller has said that if oil prices were to hit $250 per barrel, gas prices would hit $1,000.
Many analysts and oil executives have already described Miller's predictions as apocalyptic and warned against attempts to talk oil and gas prices up.
But Stern believes Europe is at risk of an energy crisis without some kind of Russia-Ukraine deal.
"We should have seen it coming in 2006. Now, we can definitely see this coming. This is coming... If we have a bad winter, there will be uproar," he said.
As well as the price itself, the two need to agree a transit tariff and a storage tariff, Stern said, as well as a more workable duration than the annual round of talks leading to a midwinter crisis. Continued...



