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New Russia-Ukraine

Touristclick Russia Travel News

New Russia-Ukraine

by BBC News

A fresh gas price dispute is brewing between Ukraine and Russia, raising the risk that Russian exports of the fuel to western Europe may be affected.

Most of Russia's gas exports to the European Union (EU) are piped through Ukraine and any row between the two nations is keenly watched.

Kiev has warned that if Moscow raises the price it has to pay for the gas it will charge Russia higher transit fees.

A previous dispute between the two last year reduced supplies to EU states.

Turkmenistan issue

The latest dispute between Kiev and Moscow comes as the Ukrainian government and Russia's state-owned gas monopoly, Gazprom, try to reach agreement on how much Ukraine must pay for Russian gas in 2008.

Gazprom says it will have to charge Ukraine more as it has agreed to pay up to 50% extra in 2008 for gas it sources from neighbouring Turkmenistan.

Analysts say this could mean Ukraine having to pay 40% more for its imports from Gazprom.

"It is important for us to use our arguments as one of the top gas transit states during talks," Ukraine's Economy Minister Anatoly Kinakh told the Reuters news agency.

"The changes in gas prices should no doubt be linked to our arguments about the levels of transit fees [to western Europe] via Ukraine."

The last major gas dispute between Moscow and Kiev saw Gazprom cut supplies to Ukraine in January 2006.

That lead to a knock-on fall in exports to western Europe, which sharply pushed up prices.

Russian gas accounts for one-quarter of the European Union's supplies.

Russia has the world's largest stocks of gas, but much of it remains under-developed.

As a result, Gazprom supplements its own supplies with gas from Turkmenistan and other central Asian former Soviet nations.


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