Ukraine and Russia try to solve gas problem again

Today Russian energy giant Gazprom and Ukrainian national gas company Naftogaz are to continue their attempts to solve a bitter dispute over natural gas supplies and transit, RIA Novosti told.

With the clock ticking before Gazprom's January 1 deadline arrives, the two sides are set for decisive talks over the Russian concern's decision to raise prices for natural gas to Ukraine to market levels if there is any chance of preventing its threat of turning off the taps to the neighboring country becoming a reality.

Russia and Ukraine failed to reach any agreement on Thursday. Russia offered a $3.6-billion loan to help Ukraine cover its expenses during the move to market prices, but Ukrainian leader Viktor Yushchenko rejected it, saying the country should "pay for itself."

The dispute between Russia and Ukraine on supplies and transit of natural gas reached it peak after Gazprom proposed selling natural gas to Ukraine for $220-$230 per 1,000 cubic meters and threatened to cut off the supplies if Ukraine refused to sign a revised contract. Ukraine currently pays about $50 per 1,000 cubic meters under a barter agreement.

Although Russian President Vladimir Putin subjected senior managers in the two countries' energy sectors to some stinging criticism Thursday - he all but accused them of creating a crisis in bilateral relations - Gazprom seems to be sticking to its guns.

Echoing previous statements from the monopoly's leadership, spokesman Sergei Kupriyanov said the company would cut off the supplies of natural gas to Ukraine on January 1 if the parties failed to reach an agreement. "It is possible, and the tests that we conducted last week clearly confirmed it," he said on Russian TV.

He said the Ukrainian proposals did not reflect the current market situation and prices on the European markets.

"They pay more than $250 everywhere," he said. "The $65 or $80 offer is completely out of market range."

In turn, Ukraine has said it will raise the transit fees Gazprom has to pay to send its gas to crucial European markets from $1.07 to $3.5 per 1,000 cu m per 100 km for the transit of Russian natural gas to Europe via Ukraine.