Higher gas price with transit tariff unchanged will bankrupt gas transportation system

Ukrainian President Viktor Yushchenko says increase in the Russian natural gas price without a simultaneous increase in the cost of its transit via the territory of Ukraine may cause bankruptcy of the Ukrainian gas transportation system. He expressed this opinion during his joint press conference in Kyiv with Czech Prime Minister Mirek Topolanek.“A rise in the gas price with the old transit tariff, exactly gas accounting for 85% of it, would make the transit system go bankrupt,” he said. Yushchenko added that the principles of forming the prices of gas, its transit and storage, must be interconnected, because a discussion when a certain price is called without any proofs or arguments takes us away from rational talks. The President called setting of a single European gas price a “good idea”. 'Yet, to my mind, to have this price it is first necessary to have a single European gas policy, which is unlikely in the nearest future,' the head of state noted. In his turn, the Czech Prime Minister noted that he backed a tripartite agreement between the European Commission, OJSC Gazprom and SJSC Naftogaz of Ukraine on the supply of gas to Europe. Mr Topolanek also says the price of Russian gas for Europe may fall to USD 250 per 1,000 cubic meters. Particularly, he noted, the EU gas price is set with the use of a “mathematical model”, pegging that price to the price of petroleum and the US dollar rate. Until recently, that price was USD 450, particularly for the Czech Republic. Yet, Topolanek does not rule out that the price may fall to USD 250. He added that Ukraine and Russia must work out their own model for setting the gas price for Ukraine.