A new natural gas agreement being negotiated by Russia and Ukraine envisions Moscow's participation in the reconstruction of Ukraine's pipeline network, Energy Minister Sergei Shmatko said on Monday, RIA Novosti reported.

"An inter-government agreement targets a long-term strategy. Russia's participation in the modernization of gas pipelines is among the issues included in the document," the Russian minister said.

Shmatko said Moscow and Kiev have been negotiating the agreement since April and have made good progress at talks. He refused to comment further.

Russia and the European Union signed on Monday a memorandum on an early warning mechanism to protect Europe from potential energy supply cuts in case of a repeat of the gas dispute between Russia and Ukraine at the start of the year.

Russia's Gazprom briefly cut off supplies to Ukraine on January 1, 2009 amid a bitter gas pricing and debt dispute, suspending transits to the European Union seven days later in the absence of a new contract with the ex-Soviet neighbor.

The conflict was resolved on January 19, when Russian Prime Minister Vladimir Putin and his Ukrainian counterpart, Yulia Tymoshenko, agreed deals on deliveries to and gas transit through Ukraine for 2009. Ukraine transits around 80% of Russia's Europe-bound gas.

The EU energy commissioner who attended the ceremony of the memorandum signing in Moscow said he hoped there would be no repeat of gas supply interruptions.

"I hope Ukraine will pay for gas," Andris Piebalgs said, adding that the IMF's loan to Ukraine would help the ex-Soviet republic honor its payment commitments.


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