Ukrainian MP and former fuel and energy minister Yuriy Boyko predicts that Ukraine's debt for gas on 1 January 2009 will be $3bn. He made this assertion while speaking at the fourth annual Oil Products Ukraine Market conference on 12 December in Kiev. In his remarks, Boyko noted that beginning in Q2 2009, the price of gas for Europe would fall nearly 50% in the wake of retreating crude prices and said Ukraine could reach an agreement with Gazprom to keep its prices next year the same as in 2008.
Besides this, Boyko said the domestic market needed to move to market prices for gas and targeted subsidies should be implemented for unprotected layers of society. He said adopting market prices for gas on the domestic market would "allow private investors to come and invest in production".
The MP explained, "The price of gas in Europe is tightly tied to the price of crude. Of course, it does lag by nine months. The cost of gas is the cost of gas nine months ago, plus corrections for the price of fuel oil and vacuum gas oil. Since the price of crude began to fall in July 2008 after Q2 2008, beginning in April 2009, Europe will have sharply lower gas prices. The drop will be about 50%. Last year when crude cost $97/bl, I signed a contract on 5 December for $179.5/1,000 m3 at the border. Of course, this was not a market price; it was tied to our transit and we used that argument to convince our Russian partners that European prices were not acceptable to us. If we move to European prices today, we can expect the price will be about the same. If not for one "but": if we did not have debts which on 1 January will be about $3bn – today this debt is already $2.4bn – plus, in light of the condition of Naftohaz Ukrayiny, this debt is growing. And our Russian partners, not hiding anything, are saying in the press that they want to include risks linked to this debt in the price of gas. The objective of the government today is to find a way to regulate [this matter], then the price can be retained. Civilised regulation, without including the debt in the price, is a possibility to keep the price the same".
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