January 5, 2009 in Nation/World

Gas company toughens stance with Ukraine

By LYNN BERRY Associated Press

MOSCOW – Russia’s state-controlled gas company said Sunday that it was hiking the price it wants Ukraine to pay for natural gas, hardening its position in a dispute that has decreased supplies to Europe.

Gazprom CEO Alexei Miller said that the company wanted $450 per 1,000 cubic meters, up from its last offer of $418.

Ukraine’s state gas company accused Gazprom of being unwilling to seek a compromise and said any price increase should be accompanied by a similar hike in the fee Ukraine gets from Russia to move gas through its pipelines on to European customers.

The negotiations also have been hampered by strained relations between the Kremlin and Ukraine’s West-leaning government. Kiev has angered Moscow by seeking to join NATO and by supporting Georgia during its August war with Russia.

Last year, Ukraine paid $179.50. Its state company, Naftogaz, refused Gazprom’s offer of $250 before negotiations over a 2009 contract broke down Wednesday, prompting Gazprom to shut down gas supplies to Ukraine.

Gazprom has continued to send gas to Europe, which relies on the Russian company for a quarter of its gas. But 80 percent of the gas Gazprom sends west passes through the same lines that supply Ukraine, and over the past four days the pressure in the pipelines has dropped.

Gazprom said it hoped Sunday’s offer would bring Naftogaz back to the table as soon as possible, but Naftogaz remained unbowed.

“We are open for negotiations if there are reasonable proposals that correspond to European market conditions,” Naftogaz spokesman Valentyn Zemlyansky told the Associated Press. “If the price for gas is $450, then the transit fee will rise accordingly.”

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