Page last updated at 09:48 GMT, Friday, 14 May 2010 10:48 UK

Ukraine president resists Russian gas takeover


Yanukovych: "50-50 merger'' with Gazprom would be ''interesting''

By Richard Galpin
BBC News, Kiev

Ukraine's President Viktor Yanukovych has told the BBC he will not let Russia's state gas monopoly Gazprom take control of his country's gas pipeline network.

He was reacting to an offer by Russian Prime Minister Vladimir Putin to merge Gazprom with Ukraine's main energy firm Naftogaz. Ukraine's network carries almost all of Russia's gas exports to Europe.

Moscow's surprise offer was another indication of how close relations between Russia and Ukraine have become since Mr Yanukovych was elected president in February.

"On the issue of a merger deal with Gazprom, 50-50 would be interesting for us, but it's clear that won't happen because Gazprom would never agree," Mr Yanukovych said in an exclusive interview.

We shall ensure that European customers get their gas in reliable volumes
President Yanukovych

"Russia would not want to do that... But for us, a merger under any other conditions is impossible.

"Control can only be given in return for investment by Russia and Europe in the reconstruction of the existing gas transport system. Such investors would get a share of the property. But full Russian control, no, that's empty words."

In the bitterly cold winter of 2008-2009 a pricing dispute between Russia and Ukraine left many countries in Europe short of gas.

"We shall ensure that European customers get their gas in reliable volumes," Mr Yanukovych told the BBC.

Orange squeezed

Mr Yanukovych's power base is in mainly Russian-speaking eastern Ukraine, the former Soviet republic's industrial heartland, where ties to Russia remain especially strong.

Russian vessel in Sevastopol, Ukraine (file picture)
Russia has renewed its lease of the naval base at Sevastopol in Crimea

This year he staged a dramatic political comeback, defeating the leaders of the 2004 Orange Revolution, who pursued closer ties with the West.

In the interview he denied he was moving Ukraine away from Europe and back into the Russian sphere of influence.

But he stressed how much easier it was to reach agreements with Moscow than with the EU.

"I'd like to obtain the same quick responses from the European Union that I got from Russia. We need quick decisions, not talk, on issues like visas, trade and associate EU membership for Ukraine.

"Today Ukraine is ready to integrate with Europe, inasmuch as Europe is ready to integrate with Ukraine... Put the same questions to our partners - are they ready or not?"

Russian cash

Ukraine has already signed one crucial deal with Moscow, cutting the cost of Russian gas imports while in return letting Russia's Black Sea Fleet remain in its base in Crimea for the next 25 years.

And on Monday the Russian President, Dmitry Medvedev, will travel to Ukraine to sign five further agreements.

"Ukraine will always act in its own Ukrainian interests," Mr Yanukovych said.

"The Russian Black Sea Fleet has been based here for three centuries. Under the new deal, Russia will be paying Ukraine about $40bn.

"We faced a choice of being like Greece now, or finding ways to reduce our budget deficit. So the deal with Russia on the fleet is profitable for us."

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