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. Last Updated: 07/27/2016

Kiev, Gazprom Reach Gas Price Accord

bloombergA worker conducting a safety check at a Gazprom refinery. The company is negotiating the price Ukraine pays for gas.
Gazprom has reached a preliminary deal on raising the price of gas supplies to Ukraine by $30 per 1,000 cubic meters, deputy chairman Alexander Medvedev said Friday in a television interview.

Medvedev said the gas monopoly and Ukrainian officials had reached a preliminary agreement on a price of $160 per 1,000 cubic meters for supplies next year -- nearly one-quarter higher than the current price of $130 per 1,000 cubic meters.

"The most important thing is that this price is acceptable for Ukraine," Medvedev told Russia Today state television. "So we believe that it's a reasonable price for the next year and we could work in this framework."

But Gazprom spokesman Sergei Kupriyanov said the agreement was not final. "There is no agreement on price yet; the talks are continuing," he said.

Last month, Russia urged Ukraine to make good on what it said was a $1.3 billion debt for gas shipments, a demand some Ukrainian officials described as an attempt to exert influence on Ukrainian politics following September's parliamentary elections.

Medvedev said Friday that the dispute over debt was over. "The debt issue is settled, and we are at an advanced stage of negotiations on the future price mechanism for Ukraine," he said.

Medvedev said Gazprom was negotiating a gradual rise in gas prices for Ukraine to a world level.

"It won't be just a one-year agreement but a medium-term solution," Medvedev said. "It coincides with the trend in Russia. In 2011, we'll have the market price for the local market also."

In separate comments Friday, Medvedev said Gazprom had slashed its cost estimate for developing the huge Shtokman field by $3 billion.

Medvedev said in July, after Gazprom signed a deal with France's Total to jointly develop the Arctic offshore gas field, that the project would require up to $15 billion.

But speaking with students at Moscow State Institute of International Relations two weeks after Norway's StatoilHydro entered the project, he put the cost at $12 billion.

The latest cost estimate appeared as Gazprom prepared to launch an early planning stage for the project, Medvedev said in the speech.

A Gazprom spokeswoman declined to elaborate Friday on how the company had managed to cut costs.

n Medvedev also expressed confidence Thursday that Baltic countries would allow the construction of the Nord Stream gas pipeline, which will pump natural gas from Russia to Germany.

"There cannot be any factors that would substantiate a refusal to issue permission," Medvedev told reporters.

Last week, Nord Stream executives said Gazprom had to push back the start of construction to mid-2009 to have more time to obtain Baltic countries' permission for the pipeline, amid political and environmental concerns.

n In other plans, Gazprom is delaying its option to buy 20 percent of its oil arm, Gazprom Neft, and control in two Russian gas units from Eni until 2009, Vedomosti reported Friday, citing a company manager.

Gazprom and Eni did not comment Friday.

Eni's subsidiary in Russia earlier this year bought the Gazprom Neft stake and the two gas units, Arctic Gaz and Urengoil, at a bankruptcy auction in April. Gazprom's option runs for two years after the auction.