Ukraine Seeks Russian Talks on Deepening Fuel Crisis

KIEV, Ukraine -- Ukraine's president, Viktor Yushchenko, yesterday called for negotiations with Russian oil companies to end a deepening fuel crisis.

Mr Yushchenko, who discussed the fuel shortage with Vladimir Putin, Russia's president, last week, said foreign companies had adopted "a very cautious attitude" to Ukraine after Yulia Tymoshenko, the prime minister, imposed petrol price controls last month.

Ms Tymoshenko had lashed out at Russian oil companies earlier in the day, blaming them for running a cartel.

Ms Tymoshenko denied that price controls were to blame and accused Russian oil companies of trying to undermine the new Ukrainian leadership, which defeated a Moscow-backed candidate in presidential elections held in December.

"It's simply a plot, it's simply sabotage. They simply want to show Ukraine her place," Ms Tymoshenko said. "Nobody [in Russia] can accept that Viktor Yushchenko won the presidential elections. Nobody can accept that a new government has come to power, and nobody can accept that we have started to clean up after the old authorities," she added.

The accusations, which came as Russia's Lukoil announced it was introducing rationing at its Ukrainian petrol stations, increased the temperature in a bitter dispute between Ms Tymoshenko's government and the Russian oil companies that own the bulk of Ukraine's refining industry and supply more than 80 per cent of the country's crude oil. Lukoil has imposed a limit of 10 litres of oil products per vehicle.

Ms Tymoshenko capped prices last month as part of an effort to control inflation, but is now facing a cooling economy. Gross domestic product figures released yesterday showed annual growth slowing to 3.9 per cent in April, down from 13.3 per cent in April last year. Ms Tymoshenko said the previous government might have been "cheating" when it reported rapid expansion in 2004.

She is calling on parliament to rush through a bill lifting duties on imported oil products to allow emergency fuel supplies from Belarus and Lithuania.

The prime minister also announced plans to build a large, modern refinery near Odessa that would use Caspian oil, increasing the government's influence over the fuel market and reducing the importance of Russian refineries.

Source: Financial Times