Ukraine, which produces 20 billion cubic meters of natural gas annually, and consumes some 78 billion cubic meters, currently imports a mixture of Russian and Turkmen gas. The price formula is based on a European rate of $230 per 1,000 cubic meters for Russian gas and $60 per 1,000 cubic meters for the Central Asian republic's gas.
By the end of 2006, Ukraine will buy gas at $95 per 1,000 cubic meters from trading company RosUkrEnergo, which is 50% owned by Russian energy giant Gazprom and is the sole supplier of Russian and Central Asian gas to Ukraine.
"We have analyzed our economy and believe that Ukraine needs three years to get accustomed to at least the prices of our neighbors [which currently purchase gas at considerably higher prices than Ukraine," Yuriy Boiko said.
Russia, which holds the world's largest reserves of natural gas, is Ukraine's main gas supplier. The issue of gas deliveries has become vital this year, following a price row in January, when Gazprom raised gas prices to world market levels and cut off supplies to its ex-Soviet neighbor. It later accused Ukraine of siphoning off Europe-bound transit gas.
