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Last Updated: Tuesday, 20 December 2005, 15:48 GMT
Ukraine rejects Russia gas threat
Gas pipeline
Four-fifths of Russia's gas passes through Ukraine
Ukraine's president Viktor Yushchenko has dismissed threats by Russia's gas monopoly Gazprom to cut off its gas supplies unless new prices are agreed.

Mr Yushchenko was speaking a day after talks between the Russian and Ukrainian premiers failed to resolve the stand-off over gas prices.

Moscow wants to raise the price of gas for Ukraine to bring it in line with world market rates.

But Mr Yushchenko said the threats to end supplies amounted to "blackmail".

Currently Ukraine receives heavily discounted gas from Russia, offsetting the price against fees levied for transporting Russian gas through its pipelines.

Rapid increase

Gazprom says it will not compromise over its demand that Ukraine pays what it says are appropriate rates.

Moscow wants to more than quadruple the price of supplies to the Ukrainian market, to between $220 and $230 per 1,000 cubic metres.

Gazprom has now threatened to cut gas supplies altogether if new terms are not agreed by 1 January.

Ukraine says it is happy to pay market rates but wants price increases to be gradually phased in over several years.

It also says it should be a price closer to that of Baltic states such as Estonia. Gazprom announced in November that rates for the Baltic countries would rise to between $110 to $125 per 1,000 cubic metres.

Pipeline purchase?

Meanwhile, the former Soviet republic of Georgia has agreed to almost double the price it pays for the gas it receives from the Russian monopoly.

Georgia has now agreed to a pay $110 per cubic metres, up from $63.

At the same time, Gazprom said it was interested in buying Georgia's gas pipeline infrastructure.

"As regards purchasing the pipeline, we are bringing this issue up and we would like Georgia to consider it," said Gazprom's deputy head Alexander Ryazanov.

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