Moscow and Kiev fail to reach gas agreement

Prime ministers from Russia and Ukraine failed to reach a new agreement on natural gas prices on Monday, a spokesman for Russia's state-run gas monopoly said, as a tense dispute between Moscow and Kiev continued.

Ukraine's premier, Yuri Yekhanurov, traveled to Moscow to meet face-to-face with his Russian counterpart, Mikhail Fradkov, and try to persuade Russia not to immediately hike gas prices more than fourfold.

Kiev, which had been paying US$50 (Ђ42) per 1,000 cubic meters, asked for the increase to be phased in over five years to give energy-inefficient industries time to adjust. Moscow, however, rejected the request and has threatened to turn off the taps if a deal isn't signed by Jan. 1.

A spokesman for Russian natural gas giant Gazprom said that company had received confirmation that the talks had yielded no results.

The spokesman spoke on condition of anonymity since the talks were between high-level government officials and he was not yet authorized to discuss the results of the talks.

Citing an unnamed source present at the meeting, the RIA-Novosti news agency said the Ukrainian side agreed that market prices should be applied, "but they do not yet appreciate that it should be done immediately," the source said.

The gas dispute highlights a deepening chill in Russian-Ukrainian relations that set in with last year's Orange Revolution and the rise to power of pro-Western President Viktor Yushchenko.

Russia supplies almost half of the European Union's gas imports, sending some 80 percent of them through Ukrainian pipelines, and the spat has raised fears that supplies could be interrupted.

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