Russia, Ukraine at odds over gas prices as deadline nears | VailDaily.com
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Russia, Ukraine at odds over gas prices as deadline nears

MOSCOW – President Vladimir Putin offered Ukraine a deadline deal in a tense dispute over gas supplies Saturday, ordering Russia’s state-owned natural gas monopoly to maintain Ukraine’s current fuel price for three months if Kiev agreed to pay more thereafter.Putin said his offer was only valid until the end of the day – 10 hours before a threatened cutoff of supplies to Ukraine.Late Saturday, Ukraine’s TV5 carried a statement by the Ukrainian gas company, Naftogaz, saying that “the leaderships of NAK Naftogaz and OAO Gazprom have agreed over the telephone to unchanged prices of natural gas and gas transit for the first quarter of 2006.”But it did not answer the key question of what price Naftogaz would pay after that and as midnight passed in Moscow there was no official word from either side.Sergei Kupriyanov, spokesman for Gazprom, Russia’s state-controlled gas monopoly, said earlier that the company had not received any signed documents that would formalize an agreement.Ukrainian officials had said they were prepared in principle to pay market prices – but that those had yet to be determined.”As far as Putin’s statement is concerned, we are accepting the proposal about the transfer to market prices, but both sides will have to negotiate and agree about the figures,” said Valentyn Mondriyevsky, a spokesman for Ukrainian Prime Minister Yuriy Yekhanurov.Gazprom was demanding that Ukraine pay $230 – more than four times the current price of $50 – per 1,000 cubic meters of gas and vowing to halt supplies to Ukraine at 10 a.m. Sunday unless an agreement was reached.Ukraine wanted any increases bringing what it pays closer to world prices to be phased in gradually. President Viktor Yushchenko said late Friday that the most his country was willing to pay now was $80.The showdown underlined the tension boiling between the ex-Soviet republics since the West-leaning Yushchenko – who wants to decrease Moscow’s clout in his country – beat out his Russian-backed rival in a bitter electoral battle a year ago.Russian television channels showed Putin on Saturday hearing the latest on the negotiations from Gazprom chief Alexei Miller, then making his offer.”I’m ordering the government and Gazprom to conduct gas supplies to Ukraine in the first quarter of 2006 on the terms and at the prices of 2005, if the Ukrainian partners by the end of the day sign a contract proposed by Gazprom to transfer to free-market prices starting from the second quarter,” Putin said during a session of the presidential Security Council.”If there is no clear response, we will consider that our proposal has been rejected.”The Ukrainian president’s office said that in a telephone conversation with Putin on Saturday, Yushchenko emphasized that “it’s extremely important that the sides refrain from political or economic pressures. I believe we will reach a compromise.”During the first quarter, Gazprom offered to deliver Turkmen gas to Ukraine at the same price as Russian gas – lower than the Turkmen price of $60 per 1,000 cubic meters in Ukraine’s agreement with Turkmenistan, Kupriyanov, the Gazprom spokesman, said.”This is a very attractive offer,” he said. “If Ukraine doesn’t like even that, that means it’s intended to stir up confrontation.”Gazprom negotiated a quick deal to buy up Turkmen gas in a move widely interpreted as an effort to prevent deliveries to Ukraine.Gazprom said the price increase marked a long-overdue transfer to free-market price mechanisms. However, Andrei Illarionov, Putin’s former economic adviser, denounced it Saturday as a political move signaling a rise of neo-imperialist trends in Kremlin policy.Illarionov said the Kremlin had asked him to help cast the price increase as a free-market measure, but he resigned this week because the move “had no relation not only to liberal economic policy, but to economic policy at all.””Energy weapons are being used against neighbors,” Illarionov said on Ekho Moskvy radio.Russia, which supplies about half of the European Union’s gas, much of it flowing through Ukraine, moved in advance to blame Ukraine for any disruption in supplies to Gazprom’s Western clients.Gazprom informed European customers that if it stopped deliveries intended for Ukrainian use, supplies to other countries could be restricted if Ukraine siphoned off gas meant for transit farther west.


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