RIA Novosti: Gazprom Could Lose Billions Over Ukraine Gas Deal – Analyst

MOSCOW, December 18 (RIA Novosti) ­ Russia’s deal to provide Ukraine with cheaper gas may mean billions of dollars in lost profits, an investment analyst told a business newspaper in remarks published Wednesday.

President Vladimir Putin announced that Russia would slash the price of its gas to Ukraine by one-third on Tuesday, down to $268.5 per 1,000 cubic meters from the current level of more than $400.

Ankorinvest investment analyst Sergei Vakhrameyev told Vedomosti that, assuming Russian state-run gas giant Gazprom provided 25 billion cubic meters to Ukraine’s Naftogaz annually, it would see a $3.5 billion drop in the profits it made by selling the fuel at the previous price.

But Vakhrameyev said Gazprom could recoup potential losses by upping its gas supply to Ukraine to compensate for the decline in value.

“Despite the decline in prices to Naftogaz, Gazprom shouldn’t suffer,” he told Vedomosti.

Russian President Vladimir Putin’s deal with Ukrainian President Viktor Yanukovych to drop gas prices and provide $15 billion in loans marked a decisive restoration of ties between Ukraine and Russia, which had been by strained by Kiev’s previously stated intention to seek a closer economic relationship with the European Union.

Ukraine stunned Europe last month by announcing that it was giving up pursuit of an association agreement and trade pact with the EU, favoring ties with the Moscow-led Customs Union trade bloc instead.