Yushchenko Sacks Ukrainian State Oil And Gas Company Chief

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko has dismissed the head of the state-owned Naftogaz oil and gas company, Olexi Ivchenko, his office said, amid a row over gas supplies with Russia.

Sacked head of Naftogaz, Olexi Ivchenko

Officially Ivchenko, in office since March, is going because his job no longer exists, but he has come under fire recently for his management of negotiations with Moscow.

Tension has increased between the neighbours over Russia's plans to phase out subsidized gas prices for Ukraine and bring them in line with world market rates.

Under a 10-year contract that entered into force in 2003, Russia provides Ukraine with gas at a base price of 50 dollars per 1,000 cubic metres (35,316 cubic feet), to take into account payment for transit of Russian gas exports through Ukraine to Europe.

Kiev pays the bill in kind under a barter system.

Moscow wants to switch to cash payments and to hike the price to 160 dollars (136 euros) per 1,000 cubic metres of gas.

Ukraine has a near monopoly on transit of Russian gas to European countries to the west, a situation that is expected to end after the planned construction of a gas pipeline from Russia through the Baltic Sea to Germany.

Pundits in Kiev link the dispute to Ukraine's parliamentary election next March, which Yushchenko will need his supporters to win to continue with pro-Western policies.

Source: AFP