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Monday, August 14, 2006

Ukraine to abide by gas deals with Russia - Prime Minister

KIEV, August 14 (RIA Novosti) - Ukraine's government intends to abide by agreements on natural gas imports from Russia in effect since the beginning of the year, Prime Minister Viktor Yanukovych said Monday.

The price of natural gas, an important factor for Ukraine's economy, has been a contentious issue between the ex-Soviet neighbors during Western-leaning President Viktor Yushchenko's time in office. Members of Ukraine's opposition have strongly opposed the pricing system agreed to at the beginning of the year, by which the country pays roughly double the former rate for gas supplies from Russia.

"We are not planning to review natural gas contracts with Russia for 2006, but we will be seeking transparency in our cooperation next year," Yanukovych, who is widely expected to pursue closer economic ties with Moscow, told a press conference.

He said that changes in gas cooperation were possible only if Russia agreed to cut the price for its supplies to Ukraine.

"If we manage to lower the price by at least a dollar, it will be a success," Yanukovych said.

It was reported earlier that Yanukovych would discuss natural gas prices with Russia during his visit to Moscow, scheduled for August 15-16.

Currently, Ukraine is receiving a mixture of Russian and cheaper Turkmen gas for a price of $95 per 1,000 cubic meters under an agreement that ended a pricing spat with Russia in late 2005 and early 2006. The price formula was based on a rate of $230 for Russian gas and $60 for the Central Asian republic's gas. However, the agreement was only valid for the first half of 2006.

Russia's largest energy company, Gazprom, is seeking to raise prices for Ukraine and other former Soviet republics to European levels, which was the reason behind the New Year dispute. At the time, the gas monopoly suspended its supplies, prompting Ukraine to call the move blackmail, while Russia in turn accused its neighbor of tapping gas intended for European markets.
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