Ukraine's PM Wants Direct Gas Purchases

BRUSSELS, Belgium -- Ukraine is seeking to buy natural gas supplies directly rather than going through an intermediary company partially owned by Russia, the country's prime minister said Monday, citing corruption concerns.

Ukraine's Prime Minister Yulia Tymoshenko attends the European Parliament's foreign affairs committee in Brussels January 28, 2008.

Prime Minister Yulia Tymoshenko, on a two-day visit to Brussels, was meeting with EU officials about energy and economy issues.

She said her government planned to eliminate the middlemen from Ukraine's energy contracts, saying "the presence of such intermediaries is the first indication of some corrupt actions."

"Ukraine does not need any additional shadowy middlemen for its gas contracts with Uzbekistan, Turkmenistan, Kazakhstan," she said.

Nearly all of Ukraine's gas imports come through Russia from the energy-rich central Asian nation of Turkmenistan. The gas is imported through the Swiss-based trading company RosUkrEnergo, half of which is owned by Russian energy giant Gazprom and half by two Ukrainian businessmen.

The deal has been in place since 2004. Losing influence over gas imports to Ukraine would likely anger Russia, which is already unhappy with Ukraine's pro-Western policies.

Ukraine and Russia have clashed over gas imports in the past. Moscow temporarily cut off gas supplies to Ukraine two years ago - a shutdown also felt in Western Europe - in a move widely seen as punishment for Ukraine's pro-Western course.

Tymoshenko's talks with officials at the EU headquarters were dominated by trade and energy issues. She got a pledge from the EU to begin negotiations for a comprehensive free trade agreement with Kiev within weeks.

"It's now just a technical matter. When our experts on both sides are ready, we'll start ... it's just a question of weeks," European Commission President Jose Manuel Barroso said.

The talks on establishing a free trade agreement with Ukraine would offer the ex-Soviet republic better access to the EU internal market, but are contingent on Ukraine's accession to the World Trade Organization.

The EU cleared the way for Kiev to join the WTO earlier this month, after Ukraine guaranteed it would cut export duties on some raw materials.

Barroso urged Tymoshenko to carry out political and economic reforms, saying Ukraine's political stability was key to its forging better ties with the EU. The 27-nation bloc has so far rebuffed Ukrainian requests for EU membership talks.

Tymoshenko said that, if Ukraine did get a chance to open accession talks, "it will do its homework." Her government has promised to end years of political turmoil and turn Ukraine into a law-abiding European nation.

The EU is Ukraine's largest trading partner and its largest market. In 2006, it absorbed 25 percent of Ukraine's exports, worth 8.7 billion euros, and accounted for 42 percent of Ukrainian imports, worth 17.8 billion euros.

Ukraine is also an important transit route for western Europe's oil and gas supplies from Russia and the Caspian Sea region.

In Brussels, Tymoshenko also planned to discuss energy issues with the EU energy commissioner, Andris Piebalgs, and the coordinator for the Nabucco gas pipeline project, Jozias van Aartsen.

The Nabucco pipeline, backed by both the EU and the United States, is designed to ease Europe's reliance on Russia by carrying gas from the Middle East and Caspian countries other than Russia via Turkey.

"There will be more pathways ... for greater diversification of energy supplies and energy security," Tymoshenko said.

Source: AP