Putin heads to Ukraine for energy talks

Russian Prime Minister Vladimir Putin heads on Wednesday to Kiev for energy talks with Ukraine’s Kremlin-friendly leadership which wants cheaper Russian gas in return for possible energy concessions.

Putin will discuss cooperation in gas and nuclear energy, aviation, space and agriculture with his Ukrainian counterpart Mykola Azarov and also meet with the country’s president Viktor Yanukovych.

The two sides will sign a “number of agreements,” the Russian government said without elaborating.

On a similar visit to the ex-Soviet neighbour in April, Putin caught Ukraine’s leaders off guard by proposing a merger between Russia’s Gazprom, the world’s largest gas firm, and Ukraine’s gas company Naftogaz.

Coming to power early this year, Yanukovych did an about-turn on relations with the Kremlin, agreeing in April a landmark deal to keep Russia’s Black Sea Fleet based in Crimea at least until 2042 in exchange for a 30 percent discount on Russian gas exports to its neighbour.

Despite the rapidly warming ties, Ukraine has so far managed to hold ground on the energy front, insisting that any merger with Gazprom should be implemented on equal terms. Ukrainian officials have however said a joint venture between the two energy companies is a possibility.

Under the previous pro-Western administration in Ukraine, gas pricing had repeatedly been at the centre of disputes between the two countries.

In January 2009, haggling over gas issues led to energy supplies being turned off to several EU states in the midst of a bitterly cold winter.

Russia has long said it wants a stake in Ukraine’s prized Soviet-era pipeline network, while Ukraine has said it wants another gas discount leading analysts to believe that some sort of compromise can be agreed between the two governments.

Trade turnover between January and August increased by more than 76 percent to some 22.2 billion dollars compared to the same period last year, the Russian government said.