Russia and Ukraine set to resume crisis gas talks

Russia and Ukraine are set to resume crisis talks on Friday in a bid to resolve a dispute over gas prices. Ukraine has rejected Moscow's offer of a loan to help pay for a controversial hike in the cost of Russian gas. Russia wants to quadruple the amount it charges Kiev for the gas in order, it says, to bring it up to global norms - but Ukraine is accusing it of spite.

Russian president Vladimir Putin says the impasse has led to a "real crisis" in relations between the two countries. Russia says it will cut gas supplies by Sunday if Kiev does not comply. It insists that Ukraine must pay market rates for the gas from its state-owned firm Gazprom, which wants to quadruple prices to between $220 and $230 per 1,000 cubic metres.

Ukraine says it cannot afford to pay the extra cost immediately and accuses Moscow of trying to score political points with the price hike. Relations between Kiev and Moscow have been tense ever since the election in Ukraine of the pro-Western President Viktor Yushchenko in 2004.

Kiev's energy minister has been in Moscow meeting his Russian counterparts to try and resolve the gas dispute.Moscow has offered Ukraine a commercial loan, worth $3.6bn (Ј2.1bn), to help cushion the increased cost - a sum President Vladimir Putin described on local TV as huge, "even by Russian standards".

Ukraine rejected the offer, with President Viktor Yushchenko's office saying his country "does not need these credits". "Ukraine will rely on its own resources under a clear, correctly and objectively formed price," his office quoted him as saying. Mr Yushchenko was earlier quoted by Russia's Itar-Tass news agency as saying the planned price hike is "provocative".

Ukraine receives cheap gas from Russia and in return, Russia uses Ukraine's pipeline network to transport most of its gas exports to western Europe. The row has escalated steadily with Russia saying that it will cut Ukraine's quota from the pipeline if Ukraine doesn't agree to the price hike, reports BBC news. I.L.