OREANDA-NEWS. April 13, 2011. During a television project "Conversation with the Country" by the President of Ukraine Victor Yanukovych was raised several issues, including on gas prices.

Appropriate steps to address them have been taken by the Government.

The price of natural gas that supplied to Ukraine, and pay for it are determined by agreements between Ukraine and the Russian Federation.

In January 2009, between the national joint-stock company “Naftogaz of Ukraine” and “Gazprom” (Russian Federation) contracted amount and conditions of gas transit through Ukraine for the period from 2009 to 2019 and the purchase and sale of natural gas in 2009 - 2019 respectively which settled supplied to Ukraine by Russian natural gas and its transit through Ukraine.

To optimize existing contracts during the working meeting of the Presidents of Ukraine and Russian Federation April 21, 2010 in Kharkiv were signed supplements that helped to reduce the price of natural gas that delivering to Ukraine.

Urgent issues today are revision of formulas gas prices (reducing the base price of gas), and receiving assurances from the Russian side on the volume of natural gas transit through Ukraine to Europe.

According to the contract dated 19.01.2009 № CP concluded between “Gazprom” and “Naftogaz”, the price of natural gas is determined by the formula depending on the levels of prices of petroleum products (oil, gas oil), which operated in the market for nine months period preceding the pricing of gas.

In Europe the cost of gas is tied to the cost of fuel oil and fuel oil, because its use is competing in the industrial and residential sectors.

According to the Law of Ukraine “On principles of operation of the natural gas market”, the Cabinet of Ministers of Ukraine dated 27.12.2001, № 1729 "On providing consumers with natural gas" demand for natural gas of the population is satisfied with the resource of natural gas production, other categories of customers - from share of imported gas.

Thus, the purchase price of imported natural gas is much higher than the purchase price of natural gas production.

The key to strengthening energy security of the state in constant prices for imported natural gas is increasing natural gas production in Ukraine, which requires large investments that must be taken into account in pricing thereof.

Thus, systematic reforms in the oil and gas industry shall be reduced dependence on imported natural gas. To achieve this goal should be planned to increase gas tariffs for all consumer level to cover economic cost, taking into account the investment component, while protecting the poor strata of the population.

Under powers granted by the President of Ukraine from 03.14.1995 years № 213 "On measures to ensure the activities of the National Commission for Electricity Regulation of Ukraine, Cabinet of Ministers of Ukraine dated 25.12.1996 № 1548, the National Electricity Regulation Commission of Ukraine sets retail prices natural gas needs, and in agreement with the Ministry maximum levels of natural gas prices for institutions and organizations financed from the state and local budgets, customers and other entities.

For heat production at thermal power utilities to provide public services for heating and hot water using natural gas ceiling price is set by the NERC at 1309.20 hrn. per 1000 m3 including VAT, exclusive of approved rate for natural gas as a target bonuses, the rates for transportation, distribution and supply of natural gas at regulated tariffs.

Maximum price of natural gas for thermal power utilities (in the part of public services for heating and hot water) is unified for that category of consumers throughout Ukraine.

Today in Ukraine there are retail prices for natural gas for population this prices are differentiated depending on the annual natural gas consumption and the presence or absence of gas meters and do not depend on customers of the region.