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Sunday, 23 March 2014 | MYT 10:30 PM

Ukraine sees Russian gas price at $386-$387 per 1,000 cubic metres

KIEV (Reuters) - Ukraine's Fuel and Energy Minister Yuri Prodan said on Sunday he expected Ukraine would pay Russia $386-$387 per 1,000 cubic metres of gas in the second quarter of this year, citing a deal with Russia which the Kremlin has recently denounced.

In December, Russia agreed to reduce gas prices for Kiev by about a third to $268.50 per 1,000 cubic metres as of January 2014, but the deal allowed for the price to be revised quarterly and earlier in March Prodan said Russia's Gazprom was likely to increase the price to $368.5 (223.48 pounds).

Sunday's estimates for the second quarter are higher still, but also hinge on a separate, earlier price deal with Russia.

"The price has not been settled, but probably it will be between $386-$387 per 1,000 cubic metres taking into consideration the Kharkiv agreement," Prodan told reporters.

The Kharkiv deal was struck as a trade-off with Moscow that gave Ukraine cheaper gas in exchange for the extension of the lease of Russia's Black Sea fleet in Sevastopol in Crimea, the southern peninsula now annexed by Russia.

On Friday Russian Prime Minister Dmitry Medvedev said the 2010 deal would cease to be valid, giving Russia a legal right to sue for money back from Ukraine.

Russia's annexation of Crimea and the new Ukrainian government's pro-Western policies have brought about the worst confrontation between Moscow and the West since the Cold War.

On Saturday, Ukrainian premier Arseny Yatseniuk said the country would need energy from the European Union to protect it from the repercussions of its standoff with Moscow, on which it depends for over half its oil and gas.

(Reporting by Natalia Zinets; writing by Alessandra Prentice and Keiron Henderson)


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