Gas 'Headache' Tops Ukraine PM's Agenda On Russia Visit

MOSCOW, Russia -- Ukraine's new pro-Moscow Prime Minister Viktor Yanukovych was heading to Russia for talks on energy that will test his recent promises to continue his country's pro-Western course.

Ukraine's new pro-Moscow Prime Minister Viktor Yanukovych, was heading to Russia for talks on energy that will test his recent promises to continue his country's pro-Western course.

Yanukovych's visit to the Black Sea resort town of Sochi less than a fortnight after his confirmation in office was hailed by some Russian commentators as a renewal of relations battered by the 2004 "orange revolution" that marked a turn away from Moscow, as well as by a January "gas war".

He was officially due to meet his Russian counterpart Mikhail Fradkov Wednesday but was also likely to meet President Vladimir Putin on the sidelines of an economic summit of the leaders of Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan.

The visit is likely to be closely watched, not least because of the disruption of natural gas supplies to European Union countries last January that resulted when Russia briefly cut supplies to Ukraine.

The Russian newspaper Gazeta said that Yanukovych was in a weak position as Ukraine faced problems coping with the price it pays for gas imports following the January dispute, which was resolved with a substantial price hike.

"Viktor Yanukovych's headache is not with political curtsies but the energy crisis that Ukraine is on the threshold of," Gazeta said.

Ukraine's difficulties in paying could allow Russian energy giant Gazprom to extend its influence over the Ukrainian distribution network and possibly its transit network, the newspaper said, noting that such a move would have to be handled carefully.

Together with the state energy company Naftogaz, Ukraine's market is "practically already taken up by companies controlled by Gazprom -- RosUkrEnergo and Ukrgaz-Energo," said Gazeta.

RosUkrEnergo is a gas trader 50-percent owned by Gazprom that sells a combination of Russian and Turkmen gas to Ukraine and is criticized in Ukraine and the West as intransparent.

"Gazprom is making every effort to distance itself from Ukraine's problems and to act only through daughter and 'grand-daughter' companies" that are now meeting half of Ukraine's gas needs, the paper said.

The results of the visit will be scrutinised by some in Ukraine who fear Yanukovych will reverse the pro-Western course set by President Viktor Yushchenko during the "orange" mass protests of 2004.

At this March's parliamentary election Yanukovych campaigned against Yushchenko's plans to guide Ukraine into the North Atlantic Treaty Organisation (NATO), a goal that has angered Moscow.

Speaking last Friday, Yanukovych appeared to signal a weakening of commitment to economic reform, saying that long-delayed accession to the World Trade Organisation might have to be postponed again until next year.

But he has also tried to reassure Yushchenko's pro-Western wing, saying he will continue reforms needed if the country is to join the European Union.

Before leaving Kiev on Monday, he promised to resolve concerns about the transparency of the deal that solved the January "gas war" -- particularly the creation of RosUkrEnergo.

"Concerning 2007, we will without a doubt work to create a mechanism that is transparent so that both the Ukrainian and international community know just how it works," Yanukovych said.

Yanukovych was also expected to raise other trade issues, including the terms of Ukrainian exports of meat, milk products and pipes to Russia.

This week's meeting may prepare the ground for a summit between Putin and Yushchenko, who have had frosty relations, commentators said.

Source: AFP