Ukraine`s state energy firm Naftogaz said on Wednesday it has gas payment arrears of $2 billion to intermediary RosUkrEnergo, raising its previous debt estimate, though Gazprom puts it higher, Reuters reported.

The debt has sparked a new diplomatic row between Ukraine and Russia, sending worries through Europe, which is about 25 percent dependent on Russian gas and fears another switch-off in supplies.

But Russian gas export monopoly Gazprom, which puts the arrears at $2.4 billion, said it will try its best not to repeat the brief cutoff which happened in early 2006.

`We will take into account all the lessons of that situation and make every effort possible to prevent events developing along that scenario,` Gazprom spokesman Sergei Kupriyanov told reporters in a conference call from Moscow.

Kupriyanov stood by Gazprom`s estimated debt figure of $2.4 billion, which includes $430 million for September deliveries, $800 million for October, $840 million for November to date and penalties of $340 million for late payments.

Naftogaz, which is currently negotiating next year`s price for the gas on which Ukraine depends, maintains it is lower.

`Our unfulfilled financial plan (the debt) is 10 billion hryvnias at a rate of 5.05 to the dollar,` Unian news agency quoted deputy chief Ihor Didenko as telling a conference.

Kupriyanov declined to say after two days of talks in Moscow how much Ukraine had promised to re-pay by Dec. 1

He also said Ukraine and Russia could stick to an agreement for a three-year transition to world market prices -- rather than an abrupt rise to $400 per 1,000 cubic metres from $179.50 now -- only if outstanding bills were settled now.

`If we are switching to the market price not gradually but from Jan 1 of the next year, that price for Ukraine may exceed $400 per 1,000 cubic metres based on the current European price,` he said.


The prime ministers of Ukraine and Russia -- Yulia Tymoshenko and Vladimir Putin -- agreed on the three-year transition to world prices in talks last month.

Gazprom, which supplies Europe with a quarter of its gas needs, said on Tuesday that Naftogaz had agreed to pay part of the arrears by Dec. 1 and made a long-term deal contingent on settlement of all debts.

Disputes over arrears and prices have been common between the two former Soviet states in recent years. The brief cutoff of supplies in January 2006 led to disruptions in supplies to Europe, which gets about a fifth of its Russian gas via Ukraine.

Naftogaz`s chief, Oleh Dubyna, said the company wanted to buy $600 million on the interbank market to settle part of the debt. Its purchases of the dollar have often moved the hryvnia currency, which hit a historic low in October.

`At the moment it is impossible to buy foreign currency in Ukraine,` Dubyna told journalists. `Yesterday we threw about (the equivalent of) $600 million at the market and didn`t buy any dollars`.

`Today we are going to work with the central bank to buy the currency and settle gas payments.`

He said gas consumption had been declining in Ukraine in recent months linked to the slowdown in industry and expressed satisfaction with terms of payment reached with Gazprom.

`I am pleased we have an understanding with Gazprom. We agreed that by Dec. 1 we will settle our debt for September and after Dec. 1 we will meet and examine the situation and how we will resolve it,` Dubyna said.

Thomson Reuters