Russia Won't Cut Gas Price for Ukraine

Russia won't lower gas prices for Ukraine in exchange for a stake in a consortium that would manage and operate the country's gas pipeline system, the main lobbyist of gas monopoly OAO Gazprom and deputy parliament speaker Valery Yazev said Thursday.

Photo: Russia Won't Cut Gas Price for Ukraine

Ukraine's new leadership under President Viktor Yanukovich has suggested a joint Russian-European Union consortium to be set up to help modernize the country's gas pipeline network.

Having benefitted from subsidized prices since the breakup of the Soviet Union, Ukraine—an important transit country for Russian gas flowing to Europe—ast year agreed to pay market price for its gas imports from Russia. The country currently pays close to $300 per 1,000 cubic meters, but now wants Moscow to lower that price by a third, The Wall Street Journal reported.

Ukraine's prime minister is expected to bargain for lower prices on natural gas imports and seek closer diplomatic ties when he meets with Russian premier Vladimir Putin on Thursday.

Mykola Azarov's trip is part of an effort by Ukraine's newly elected president Viktor Yanukovich to review a deal made last year with Russia on the price of energy and to break with his predecessor's pro-Western politics. Azarov said before heading to Moscow that he and Putin would also discuss a broad range of other economic issues.

The January 2009 agreement ended a pricing dispute that saw Russian state-controlled Gazprom gas monopoly cut supplies to EU nations through Ukraine for two weeks. Europe gets around 20 percent of its gas from Russia, most of it via pipelines that cross Ukraine.

Yanukovych said Tuesday that he would like Russia and Ukraine to sign a new gas deal during the Russian president's visit to Ukraine in May. He said that the 2009 deal that obliged Ukraine to pay European gas prices was too heavy a burden for the nation which has been hit severely by the global financial crisis, The Associated Press reported.

Ukraine's gas transportation system is Europe's second largest gas pipeline network and the main route for Russian natural gas supplies to European consumers. In early 2000, Kiev and Moscow discussed the possibility of creating a gas transport consortium with the involvement of EU partners to manage and modernize Ukraine's Soviet-era gas pipeline network, RIA Novosti reported.