Ukraine PM Says May Break Gas Contract With Russia

KIEV, Ukraine -- Ukrainian Prime Minister Nikolai Azarov hinted during a TV address on Friday that the country could break its gas contract with Russia.

Vladimir Putin (L) and Nikolai Azarov (R).

The comment comes after talks in Moscow this week between Azarov and Russian Prime Minister Vladimir Putin, during which Ukraine failed to convince Moscow to lower its gas price.

"Ukraine will not have this contract forever," Azarov said on Ukraine's Channel One. "The moment will come when we break it. For this reason, it is best sooner or later to negotiate a decent draft of a new treaty."

Ukraine, which is 100 percent dependent on Russian energy supplies, is seeking to revise a 2009 gas supply contract signed by former Prime Minister Yulia Tymoshenko.

Azarov, who said earlier he planned to seek lower prices for Russian gas or higher transit tariffs, confirmed on Tuesday that Ukraine would "follow all earlier reached agreements with Russia."

The current leadership claims the contract's gas pricing formula, which links the price for gas with the international oil price, is unfair and has forced Kiev to overpay since oil prices have risen strongly.

Russian Prime Minister Vladimir Putin said on Tuesday that Russia's price formula for gas is universal for all countries and Ukraine "is no exception."

Alexei Miller, head of Russian gas giant Gazprom, said on Monday that the Russian gas price for Ukraine would nearly double in the fourth quarter of this year, amounting to nearly $500 per 1,000 cubic meters.

Ukraine is paying $295.6 per 1,000 cubic meters of Russian gas in the second quarter and expects to pay $350 in the third quarter.

Source: RIA Novosti

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