Ukraine is willing to swap assets with Russia to allow the two countries to cooperate in oil and gas production, Ukrainian President Viktor Yanukovych said at a meeting with Russian Prime Minister Vladimir Putin in Istanbul on Tuesday.
"We could swap some assets with Russia to cooperate in oil and gas
production in Russia," Yanukovych said, RIA Novosti reported. "We would like to see you
[Russia] as partners not only in the transit and consumption of gas, but
also in co-production."
He asked Putin to help Ukraine secure loans from Russian banks to finance the construction of two new nuclear power units.
Putin said Russia was ready to draw up regulations on a free trade zone with Ukraine.
"As far as free trade zones are concerned, all we have is a document written on one sheet of paper back in 1992," he said, adding "it is time to move on."
Yanukovych said Ukraine had managed to balance its budget thanks to a recent deal guaranteeing a discount on Russia gas prices.
In the deal, signed in May, Russia gave Ukraine a 30% discount for gas supplies in exchange for extending a lease on the Russian Black Sea Fleet base in the Ukrainian port of Sevastopol for 25 years after the current lease expires in 2017.
Putin proposed a merger between Russian gas monopoly Gazprom and Ukrainian Naftogaz on April 30. His spokesman said this meant the creation of a new company and not the absorption of Ukraine's gas monopoly, as some critics suggested.
Russian President Dmitry Medvedev said the deal would either consist of an asset swap or the establishment of a joint venture. Yanukovych said he agreed to a fifty-fifty deal.
The Ukrainian opposition claims the creation of the joint venture means the de-facto acquisition of Naftogaz by Gazprom and thus the loss of Ukrainian energy independence.
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