FX.co ★ Christmas discounts or sale on gas

Russia is courting Ukraine offering it an impressive discount on shipments of the only national wealth—oil and gas. The energy sector produces an overwhelming majority of export products in Russia. The oil and gas industry generates the lion's share of the budget revenue. The Russian President was impelled to make a significant discount on gas for Ukraine. Gazprom and Naftogaz have signed an additional agreement to the existing contract on fuel deliveries. Such liberality to Ukraine is a result of negotiations of two presidents. Vladimir Putin has approved the discount and the current price for gas is $268.5 per 1,000 cubic meters. Thus, the price of natural gas decreased by one third. Earlier, Kiev had paid $400 for the same volume. However, the period for the discount to be in force has been not determined yet. President Putin emphasized that it is a temporary measure. The initial contract was signed in 2009 and included the formula according to which Ukraine was supposed to pay for the fuel at the price the European countries did. The country’s government has attempted to revise this agreement conditions, but it has done no success yet. In August 2013, Russia's Ambassador to Ukraine Mikhail Zurabov proposed to pass the management of the biggest part of Ukraine's gas transportation system in return for the price reduction. Hence, Russia planned to gain extra income from the gas pipeline transit of 60 billion of cubic meters, but it did not happen. Now the oppositional leaders believe that the discount was offered for the membership in the Customs Union, but Putin said he had not discussed this issue with Viktor Yanukovich. It is understood that it was an impermanent compromise, which will not be able to resolve the main problem— the acute political crisis in the country.