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Ukraine leader tells PM to resume Russia gas talks

Ukrainian President Viktor Yushchenko told his prime minister on Wednesday to resume talks with Moscow urgently after Russian gas export monopoly Gazprom halved supplies to Kiev in a row over payments.

Gazprom reduced the supplies to Ukraine by 50% on Tuesday -- after starting with a 25% cut the day before -- and threatened further cuts unless debts were settled and a 2008 contract signed. It says Kiev owes $600 million in unpaid bills. Prime Minister Yulia Tymoshenko told her cabinet on Wednesday that Ukraine would stand by its obligations to export Russian gas to Europe and remain a “reliable partner”. Yushchenko, in a letter to Tymoshenko issued at midnight, again criticized her government’s conduct of gas talks and called for renewed negotiations between Ukrainian state company Naftogaz and Gazprom to establish a contract for 2008 supplies. “The only real way out of this is the continuation of talks,” Yushchenko said. He said Naftogaz should urgently be instructed to proceed with payment in accordance with a deal he clinched with outgoing Russian President Vladimir Putin at talks in Moscow in January. That deal appeared to unravel during subsequent talks conducted by Tymoshenko in the Russian capital. The Ukrainian president and prime minister have been increasingly at odds since Tymoshenko returned to office in December.

Russian president-elect Dmitry Medevedev, Gazprom’s chairman, told Yushchenko on Tuesday he expected a quick response to settle outstanding issues. Gas rows between Russia and Ukraine have caused anxiety in western Europe since one such dispute caused a brief severance of supplies in January 2006 and disrupted flows westward. Yushchenko described the actions by Tymoshenko’s government in negotiations as “improper and inappropriate”. “No understandings have been reached and no agreements signed for supplying gas for 2008,” he said in his letter. He said Gazprom was not making payments for sending Russian gas through Ukraine’s pipeline network to Europe -- a day after Naftogaz hinted that it could disrupt flows of gas to European customers if Ukrainian domestic needs were not met. Tymoshenko said Ukraine would uphold its commitments. “Ukraine is a reliable partner. We will not stray one iota from our obligations in terms of exporting natural gas to European countries,” she said.

Under a deal struck to end the 2006 row over gas supplies between Ukraine and Russia, gas originating in Russia and ex-Soviet Central Asia is supplied to Ukraine by a joint venture company serving as an intermediary. A second intermediary distributes imported gas to Ukrainian consumers. Tymoshenko, who wants all such intermediaries eliminated, said these firms had not provided necessary documentation and her cabinet was working out a method to pay off arrears without these documents. “We will oblige Naftogaz to make payments on the basis of government directives,” she said. “This will provide a way out of the situation.” (Reuters)