Oil Report

Gazprom seeks more of Ukraine gas market -report

KIEV, Dec 16 (Reuters) - Russian gas export monopoly Gazprom GAZP.MM may agree to sell gas to Ukraine at a lower price if Kiev allows the company to expand in its domestic market, a newspaper said on Tuesday.

Gazprom and Ukraine’s state gas company Naftogaz are in talks for the Russian energy giant to supply Ukrainian industrial customers directly with 10 billion cubic metres (bcm) of gas next year, Ukraine’s Delo business newspaper reported, quoting sources close to the negotiations.

This year a Gazprom unit has the right to supply Ukraine’s domestic market directly with 7.5 bcm, or around one seventh of Gazprom’s total gas exports to Ukraine of 55 bcm per year.

Both Gazprom and Naftogaz, which are in protracted talks over Ukraine’s debt for earlier gas deliveries and next year’s supplies, declined to comment.

Gazprom deputy chairman Alexander Medvedev said earlier this week that his company had made Naftogaz a proposal which may help the two sides solve the debt problem and sign the 2009 supply deal.

Gazprom has said Ukraine might have to pay over $400 per 1,000 cubic metres (tcm) for Russian gas next year, up from the $179.5 per tcm it currently pays.

Gazprom says Ukraine owes it $2.4 billion for September-November gas supplies plus interest for late payment. Ukraine says it owes $2 billion.

Ukraine consumes 75 bcm of gas per year, of which 20 bcm is produced domestically. The country’s industrial consumers need around 28 bcm of gas per year, although they have recently cut consumption by 25-27 percent due to a decline in production. (Reporting by Pavel Polityuk and Tanya Mosolova, editing by Anthony Barker)