Oil Report

Ukraine leader says $150-160 optimal price for gas

KIEV, Oct 28 (Reuters) - Ukraine’s President Viktor Yushchenko said on Sunday the most rational price for Russian gas imports next year should be $150 to $160 per 1,000 cubic metres, in keeping with a government assumption in the 2008 budget.

Ex-Soviet Ukraine pays $130 for Russian gas at the moment, still much below the price paid by European Union countries, closer to $250 per 1,000 cubic metres, but considerably higher than the $95 it paid last year.

Yushchenko said politics had played too great a role in determining gas prices -- and cited circumstances in early 2006, when the flow of Russian gas was cut off briefly as the two sides were unable for a time to agree terms.

“Let me just say what I said in 2005 when a price of $235 was proposed -- there will be no price of that sort,” he told Inter Television channel in an intervidw.

“It is not that such a price is unacceptable or too high for us -- the fact is that there is no basis for such a price.

“Given the trends on energy markets, the optimal, rational price for gas at the Russia-Ukraine border, the price which would be viewed with some understanding by most of the market, is about 150-160 dollars per 1,000 cubic metres.”

President Vladimir Putin said this month that Russia wanted a gradual transition to market prices for Ukraine.

Ukraine and Russia have had several disputes over gas prices. The brief cutoff in January 2006 led to reductions in supplies that affected some EU countries.

The EU gets the majority of a quarter of its gas needs from Russia via Ukraine. The rest goes through Belarus, which also has had gas disputes with Moscow, the last in July when Minsk fell behind in debt payments.