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Russia, Ukraine keep silent after gas talks

The two ex-Soviet nations discuss terms of an energy deal, a heated issue that has previously brought disruptions to European gas supplies

Reuters, Sunday 25 Sep 2011
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Russia and Ukraine failed to announce any progress after talks on gas supplies and trade between Presidents Dmitry Medvedev and Viktor Yanukovich late on Saturday.

Ukraine is trying to persuade Russia to change the terms of a gas supply deal between the two ex-Soviet nations, saying that it is paying too much under the current deal. Previous disputes between the two have disrupted gas supplies to Europe.

Russia has said it could only review the deal if Ukraine joined its customs union with Belarus and Kazakhstan, a move that would rule out a free trade deal between Ukraine and the European Union that Kiev wants to agree this year.

Yanukovich visited Russia on 24 September, hoping to reach compromise with Medvedev and his powerful Prime Minister Vladimir Putin.

Yanukovich said before the talks that there were "certain concerns" regarding energy issues which he hoped to resolve.

However, neither his office nor the Kremlin made any announcements on the outcome of the talks after they ended.

A statement on Yanukovich's website simply said the talks were over and Yanukovich was heading home. His office declined to provide any additional information.

Ukraine's economy relies heavily on energy produced from natural gas. In 2009, Kiev agreed to import no less than 33 billion cubic metres of gas per year from Russia at a price linked to world oil and oil product prices.

In the fourth quarter of this year, the bill is expected to approach $400 per thousand cubic metres, a level Kiev says is unreasonably high.

Ukraine can't save by importing less gas either, since the contract has a "take-or-pay" provision, obliging it to stick to the agreed volume of imports.

Its main leverage comes from the fact that Ukraine is also the main transit route for Europe-bound Russian gas, although Russia is trying to diversify exports and has launched the new Nord Stream pipeline bypassing Ukraine.

The current deal was agreed in early 2009, after a bitter price row which halted Gazprom's European supplies for weeks.  

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