Ukraine vows to break up Russia's gas trade partner

2nd September 2011, Comments 0 comments

Ukraine said on Friday it will have to negotiate a new gas deal with Russia because of previously-undisclosed plans to break up the republic's existing energy company.

The unexpected announcement came in the heat of the two neighbours' second spat over gas prices in three years and appeared part of a Ukrainian effort to force Russia to ease its negotiating line over prices.

Prime Minister Mykola Azarov said that the Naftogaz company which signed the 10-year agreement with Russia's monopoly Gazprom in 2009 would be split up into a production company and one responsible for gas transports.

"There will be a new economic entity," news agencies quoted Azarov as saying.

"There will be new companies on the market and obviously, in light of this, all the agreements that exist today have to be reviewed."

Azarov did not provide further details or say when the restructuring would begin.

His comments came ahead of a regional summit on Saturday that is due to be attended by both Ukrainian President Viktor Yanukovych and his Russian counterpart Dmitry Medvedev.

The Ukrainian prime minister said Yanukovych would try to hold separate talks with Medvedev on the sidelines of the summit in the Tajik capital Dushanbe.

But an unnamed Kremlin official told the Echo of Moscow radio that no such meeting was being planned.

Ukraine accepted the terms of the 2009 gas deal after having its supplies cut off in a Kremlin move that also affected parts of central and southern Europe.

Russia has been steadily raising the price it charges the former Soviet republic for gas after spending years subsidising shipments and ensuring friendly diplomatic relations in return.

Ukraine argues that it now pays more than some richer EU member states and that Russia's price terms are political.

Medvedev has said he was ready to lower Ukraine's gas price if it dropped plans to establish free trade relations with the European Union and allowed Gazprom to win control of half of Naftogaz.

© 2011 AFP

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