Russia and Ukraine will agree on a price for Russian natural gas until the end of 2006 in the next few days, Ukraine's prime minister said Friday.

Russia, which holds the world's largest reserves of natural gas, is Ukraine's main gas supplier. The issue of gas deliveries has become vitally important this year, following a bitter price row in January, when Russian energy giant Gazprom raised gas prices to world market levels and cut off supplies to its neighbor. It later accused Ukraine of siphoning off Europe-bound transit gas.

"Talks on the price of Russian natural gas for 2007 and the mid-term will be completed in October," Viktor Yanukovych said after a meeting with his Russian counterpart, Mikhail Fradkov. "As to this year, we will finalize the issue in the next few days."

Yanukovych pledged his country will guarantee stable Russian natural gas trans-shipment to Europe and necessary deliveries to Ukrainian consumers, and said that gas was currently being pumped into Ukrainian storage facilities.

Ukraine currently imports a mixture of Russian and Turkmen natural gas at $95 per 1,000 cubic meters. The price formula is based on a European rate of $230 for Russian gas and $60 for the Central Asian republic's gas.

But Gazprom agreed to a 50% price rise, to $100 per 1,000 cubic meters, for its supplies from Turkmenistan this month, which may affect the price for Ukraine.

Yanukovych said the price issue is fundamental for Ukraine, because a price rise was not foreseen either in consumption calculations or in the country's budget. He said that is why Ukraine is seeking to clinch a long-term, three- to five-year deal on gas supplies.

Fradkov said in turn that Turkmenistan's move to raise its price has complicated the issue, RIA Novosti reported. "Therefore, we are looking for a compromise that will suit Ukrainian consumers, comply with previous commitments and will be most effective for suppliers," he said.

He confirmed that Gazprom, Russia's Industry and Energy Ministry and Ukraine's Economics Ministry will agree on a price for deliveries to Ukraine in the fourth quarter of 2006 in a few days.

Energy will be a top issue on the agenda of an inter-state Yushchenko-Putin commission, a body set up by national leaders Viktor Yushchenko and Vladimir Putin to promote good relations between the two countries. The presidents discussed preparations for the session Thursday.


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