Russian Prime Minister Fradkov Postponed Visit to Ukraine Over Gas Dispute

11:07, 23 November 2005
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Prime Minister Mikhail Fradkov abruptly postponed a visit to Ukraine on Tuesday because of a disagreement over Moscow`s demands that Kiev pay higher prices for gas supplies, the Russian energy minister said."The postponement of the visit to Ukraine is linked to the fact that, unfortunately so far, we have not been able to reach an agreement on a new form of cooperation in the gas sector, although our Ukrainian colleagues share a basic understanding on the need to switch to market conditions,"...

[img#4412 left]Prime Minister Mikhail Fradkov abruptly postponed a visit to Ukraine on Tuesday because of a disagreement over Moscow`s demands that Kiev pay higher prices for gas supplies, the Russian energy minister said, according to AP."The postponement of the visit to Ukraine is linked to the fact that, unfortunately so far, we have not been able to reach an agreement on a new form of cooperation in the gas sector, although our Ukrainian colleagues share a basic understanding on the need to switch to market conditions," Energy and Industry Minister Viktor Khristenko said. Fradkov was due to have traveled to Kiev on Wednesday. Ukraine currently buys Russian gas at a heavily discounted rate of US$50 (euro43) for 1,000 cubic meters (35,300 cubic feet). Moscow`s western European customers pay about US$150 (euro128). Ukraine insists that the lower price is justified because it serves as a main transit point for Russian gas headed westward. Khristenko, however, said in remarks televised on the state-run Channel One that Russia was willing in return to pay cash for the transit of its gas -- rather than the current system under which Ukraine receives credit it can use to settle its gas bills with Moscow. Russia`s Foreign Ministry said Fradkov had talked by telephone Tuesday with his Ukrainian counterpart, Yuriy Yekhanurov, and the two had underlined the need to reach an agreement on the delivery of Russian gas and transit through Ukraine for 2006. They "agreed to fix the dates of their next meeting depending on this," a ministry statement said. Khristenko said the two countries should redouble their efforts to reach a compromise. "Unfortunately, the lack of an agreement for next year could provoke risks not only for Russian gas supplies to Ukraine, but for gas supplies to Europe," he said. "So the time remaining until the New Year should be spent actively reaching such an agreement." Ukraine is one of the world`s largest energy importers and is heavily dependent on Russia and the former Soviet republic of Turkmenistan for gas supplies. Both Russia and Turkmenistan have increasingly taken a harder line in negotiations with Kiev. President Viktor Yushchenko`s government has said that greater energy independence and improving energy efficiency will be key priorities. Ukraine`s Soviet-era industries are huge energy-guzzlers. For every dollar`s worth of industrial production, Ukraine consumes about 2 1/2 times as much energy as Poland does, making it very vulnerable to any price increases.

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