The FINANCIAL — Ukraine's gas transportation system will give the country some $6 billion in annual revenues if Kiev manages to persuade Russia and the European Union to invest in the modernization of Ukraine's pipelines, Ukrainian Prime Minister Mykola Azarov has told Ukraine's ICTV channel.
Azarov said this has become possible due to a 30% discount for Russian natural gas agreed by Russian President Dmitry Medvedev and his Ukrainian counterpart Viktor Yanukovych during a meeting in the eastern Ukrainian city of Kharkov on April 21.
"This agreement paves a way for other agreements that are beneficial for us. For example, gas transit — if we manage to persuade the European Union and Russia to invest in the modernization of our gas transportation system, then we will have about $6 billion in annual revenues just from the gas transportation system," he said.
The agreement reached in Kharkov stipulates that Russia will grant Ukraine a 30% discount on the gas price of $330 per 1,000 cu m over the next ten years.
In exchange, Ukraine has agreed to extend the term of the Russian Black Sea Fleet presence in the country's Crimea for 25 more years.
Azarov said the discount will help Uklraine save some $3 billion in 2010 and continue social programs, adding relevant changes have already been introduced to the country's 2010 draft budget.
"Actually, the gas price issue is not just an economic issue, and maybe even not so much an economic issue as a social one, a political one, an issue of long-term perspective. That is why I am very glad that we have finally reached a compromise with Russia," he said.
He said a $40-billion investment which Ukraine have secured as a result of the Kharkov agreements, exceeded a total investment in the country since the collapse of the Soviet Union in 1991.
Respected Russian business daily Vedemosti has counted that the discount provided to Ukraine would cost Russia $40 billion in the next 10 years. However, some of the losses for the Russian budget will be compensated after 2017 when accrued discounts will be counted towards Russia's payments for the lease of the Black Sea Fleet base.