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Ukraine: Gas deal means Europe security
by Staff Writers
Kiev, Ukraine (UPI) Oct 24, 2011

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Ukraine's recent progress toward a natural gas price agreement with Russia means security for European supplies, Ukrainian Prime Minister Mykola Azarov says.

Azarov, speaking on the Ukrainian television channel Inter Friday, said that if a "breakthrough" reached at meeting last month among Russia's President Dmitri Medvedev, Prime Minister Vladimir Putin and Ukrainian President Viktor Yanukovych is followed through, Ukraine could "guarantee" reliable Russian natural gas supplies transiting through the country to European customers.

"The first thing Russia needs is guarantees of reliable supplies of gas to Europe," Azarov said. "We are trying to persuade our Russian partners that, by concluding an agreement, we are prepared to guarantee reliable and stable gas supplies, which is our main argument."

Details of the breakthrough have remained scarce in the weeks since the meeting but one of the results appears to be that Russia is prepared to accept Ukraine's proposal that a consortium of the state-owned Russian gas monopoly Gazprom, Kiev's Naftogaz and the EU take over the management of Ukraine's gas pipeline infrastructure.

Disagreements between Ukraine and Gazprom over prices the utility charges have long contributed to tensions between the countries. Gazprom's move to shut off gas supplies to Ukraine in a 2009 price dispute left European customers without gas for heat.

Ukraine is seeking a significant discount in the price it is paying for Russian natural gas, hoping to reduce costs from the current $355 per 1,000 cubic meters -- which it says is the highest in Europe -- to $230.

Moscow appears to have softened its stance on not allowing the European Union to become part of a pipeline-operating consortium in Ukraine and also moved away from its suggestion Ukraine join its Customs Union of Belarus and Kazakhstan to get a lower price.

Azarov noted the movement on the consortium issue in his Friday interview with Ukrainian television, Interfax reported.

Europe, he said, keenly wants to receive gas through the Ukrainian pipeline and is ready to become a partner in a tripartite consortium managing the Ukrainian gas transportation system.

"Europe is interested in our pipeline most of all, as it ensures quite cheap supplies of energy from Russia and this is exactly why our negotiations with the EU indicate that the Europeans will want to join such an agreement in the future," Azarov said.

Just who would be the managing partner of such a consortium is unknown. But Moscow has given up on its hopes of persuading Ukraine to join its Customs Union and instead has concluded it is a better option to work with the EU on operating the vital Naftogaz pipeline transport system, an unnamed Ukrainian diplomat told the Moscow business newspaper Kommersant last month.

"There will be progress on the issue of the gas transportation system but it will take time," he said. "I believe we'll find a compromise based on a trilateral consortium."

A meeting between Gazprom and Naftogaz officials was to for this month to more fully flesh out the idea, the newspaper said, adding that that Ukraine wants a 34 percent share of the consortium, leaving 33 percent each for Russia and the EU.

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