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Ukraine Wins Breather in Gas Talks

Ukraine's outgoing government won a deal with Moscow on Friday to keep the price of gas imports from Russia unchanged for three more months, without resolving a dispute that could still disrupt flows to Europe this winter.

Ukraine agreed in January to a near doubling of the low prices it had been paying to Russia for gas, calming a row that had briefly cut supplies to Europe of Russian gas through pipelines across Ukrainian soil.

Russia had signaled it wanted to raise the price in July, but the new deal will keep it at $95 per 1,000 cubic meters until the end of the third quarter, Ukrainian Prime Minister Yuriy Yekhanurov told reporters. But further talks, he said, were required to negotiate a price for fourth-quarter supplies.

"Our industry can operate in a calm fashion. As for the fourth quarter, we will work further," Yekhanurov said at the start of a Cabinet meeting.

The delay means Ukraine's tough task of settling a longer-term deal with Moscow is likely to fall to the next government.

He said the agreement had been reached in talks between Ukrgazenergo and RosUkrEnergo, firms acting as intermediaries to supply Russian and Central Asian gas to Ukraine.

Ukraine's economy, dominated by heavy industry, has been hit hard by the January price increase.

Kiev accepted the rise to $95, from $50, after gas export monopoly Gazprom briefly cut supplies to Ukraine, affecting flows to Western Europe just as demand was high due to a very cold winter.

Gazprom supplies one-quarter of Europe's gas, and up to 80 percent of its European exports pass through Ukraine.

Alexander Ryazanov, Gazprom's deputy chief executive, also said Friday that price changes were unlikely for the time being.

"No decision about raising gas prices for Ukraine on July 1 has yet been made," Russian news agencies quoted Ryazanov as saying ahead of Gazprom's annual general meeting. Ryazanov is also a member of RosUkrEnergo's coordinating committee.

Ukraine, meanwhile, continued its fight over gas supplies on a second front, as Turkmenistan on Friday announced that its natural gas contract with Ukraine for the current year was invalid.

Turkmenistan has been putting pressure on Ukraine to pay about 50 percent more than what it currently pays.

Ukraine's fuel and energy minister, returning to Kiev after talks in Ashgabat, said the two sides "agreed on nothing," but denied that the 2006 contract had been annulled.

Turkmenistan's gas supplies have taken on even greater importance for Ukraine after the dispute Russia, but Kiev has repeatedly stalled on agreements to pay off debts, and Turkmen officials have repeatedly criticized Kiev.

In a statement, the Turkmen Foreign Ministry said Gazprom had not issued a license for Turkmen gas to travel through Russia to Ukraine, even after Ukraine and Turkmenistan signed the 2006 contract, thus making the contract outdated.

Gazprom controls the only transit route for Turkmen gas exports to other ex-Soviet states and Europe.

(The Moscow Times 03.vii.06)

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