The recent tensions seen between Russia and Ukraine over natural gas supplies have highlighted the importance of cheap imported Russian gas in Eastern Europe and Ukraine. Supplies of gas, unlike oil, are regional in nature, with prices in Western Europe considerably higher than Eastern Europe and Ukraine (390/mn cm compared to between 100 and 280/mn cm in 2007). Although prices in the area have increased by between 45% and 110% since 2005, analyst Fox-Davies Capital believes that even with a conservative oil price of 80lb, there is still considerable upside in gas prices in the region. The company's Stephane Foucaud, Head of Oil & Gas Research; Gerry Donnelly, Oil & Gas Analyst; and Ian Lucas, Research Assistant, report.
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