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Russia, Ukraine fail to break gas price deadlock

Vladimir Radyuhin

MOSCOW: Russia has refused to make concessions over a proposed four-fold hike in the price of Russian natural gas to Ukraine.

Ukraine's Prime Minister Yuri Yekhanurov has failed to wrest concessions on the issue during his one-day talks in Moscow on Monday with his Russian counterpart Mikhail Fradkov.

Last week, Russia's natural gas monopoly Gazprom said Ukraine will have to pay $200 to $230 per 1,000 cubic metres as of January 1, 2006, four times more than today's price of $50.

The new price for Ukraine is slightly less than $250 that Europe will pay for Russian gas next year.

This would add well over $1 billion to Ukraine's annual bill for heating homes and powering factories. Ukrainian officials said the country's steel and chemical industries will go bankrupt if gas prices exceed $120 per 1,000 cubic metres.

Russia said it was ready for compromise over the proposed gas price hike but only if Ukraine agreed to hand over control of its transit gas pipelines to Gazprom. Kiev has flatly rejected the proposal.

Meanwhile, Russia on Monday signed an accord with Belarus to supply it natural gas next year at just under $47 per 1,000 cubic metres.

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