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Yanukovych Sees Pipe Work Resuming

Russia and Ukraine are close to a deal to complete a pipeline that would boost gas exports to Europe, Ukrainian Prime Minister Viktor Yanukovych said on Friday.

Also Friday, Gazprom CEO Alexei Miller -- in his first work meeting in three weeks, during which he was treated at a hospital for a kidney condition -- discussed ties with Ukrainian Fuel and Energy Minister Yuriy Boyko.

Yanukovych spoke about a pipeline that could carry 19 billion cubic meters of gas from Kazakhstan, linking to an existing pipeline that ends at the Russian border with Ukraine. The amount would be equivalent to around 12 percent of Gazprom's exports to Europe last year.

Construction of the gas pipeline, from Bogorodchany to Uzhgorod in Ukraine, began in February 2006 but stalled after Russia demanded a share in Ukraine's larger gas transportation network. Speaking after talks with Prime Minister Mikhail Fradkov, Yanukovych announced construction was likely to resume. "The prospect is very big," Yanukovych said, Interfax reported. "We'll make a decision closer to September."

But Fradkov said Russia linked the project to a chance for Gazprom to take a share in Ukraine's gas transportation network, a highly sensitive issue on which the countries have yet to agree.

A joint venture between Gazprom and Ukraine's Naftogaz planned to spend from $2.2 billion to $2.8 billion on the construction. If built, the pipeline would eventually link to another pipeline that connects Alexandrov Gai in Kazakhstan with Novopskov in Russia.

Miller could have discussed the project with Boyko at their meeting. Gazprom didn't release details of the talks. Miller is still being treated in a hospital for a kidney ailment but is already able to hold talks, Gazprom's press service said. He was transferred from surgery to a recovery ward on Tuesday.

(The Moscow Times 25.vi.07)

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