8 Sep 2010 16:43

Gazprom, Naftogaz joint projects must be market-based - Ukrainian PM

KYIV. Sept 8 (Interfax) - Any joint projects between Russia's gas giant Gazprom and Ukrainian energy provider Naftogaz must be market-based, said Ukrainian Prime Minister Mykola Azarov.

"The prime minister's position remains unchanged: absorption or a merger [between Gazprom and Naftogaz] is out of the question. What is in question is a discussion of market mechanisms for setting up an efficient joint venture, in which the parties would have equal rights and whose interests would be equally protected," Azarov's spokesman Vitaly Lukyanenko told Interfax on Wednesday.

Ukrainian Fuel and Energy Minister Yury Boiko had said earlier in the day that Naftogaz and Gazprom could merge only on equal conditions.

"We have our president's position that any merger should be on a parity basis and should meet national interests," Boiko told journalists on Wednesday.

Gazprom CEO Alexei Miller said on Tuesday that Ukraine and Russia had discussed companies that could valuate the Ukrainian gas transportation system and Russian gas fields that could be contributed to a future joint venture. He did not specify what fields Gazprom could contribute as its share.

Following the establishment of a joint venture, Gazprom is seeking a merger with Naftogaz, Miller said.

In case of a merger, natural gas will be sold to individuals in Ukraine at the same prices as in Russia, Miller said.

It was Russian Prime Minister Vladimir Putin who first touted the idea of Gazprom's merger with Naftogaz in spring this year.

It was proposed that a joint venture be set up first on a parity basis, to which Ukraine would contribute production and transportation assets and Gazprom a field of identical value.

Gazprom has already proposed a list of fields in western Siberia and southern Russia that could possibly be contributed to the joint venture