Kiev plans to liquidate its state-run energy firm Naftogaz, and to scrap all current gas deals with Russia, Prime Minister Mykola Azarov said on Friday, in an escalation of a bitter row with Moscow over prices for gas.
"Naftogaz as a company will cease to exist. There will be a liquidation period. Some time later, after all the necessary formalities become valid, totally new companies will operate on the market. This is why all existing agreements will be revised," Azarov said.
Ukraine has been trying to revise its 2009 agreement with Russian gas giant Gazprom which tied the gas price to the price for oil boosting Kiev's bill. Former prime minister Yulia Tymoshenko is now on trial for exceeding her authority in signing it.
Ukraine said on Tuesday that it would slash purchases of Russian gas by a third to 27 billion cubic meters in 2012, down from 40 bcm this year. Gazprom maintained that under the contract, based on a 'take-or-pay' principle, Kiev would still have to pay for 33 bcm of gas regardless of actual purchases.
Azarov said that the 2009 deal violated a 2004 agreement which says the two countries could revise deliveries of gas.
"Unfortunately, the agreement of 2004, which has interstate validity and is above national law, was never fulfilled. Therefore, we believe that the contracts which were signed in 2009 contradict (it), at least in the part concerning annual gas supplies," Azarov said.
Last week Russian President Dmitry Medvedev said Ukraine might get discounts for gas if it joined the Customs Union of Russia, Belarus and Kazakhstan and agreed the acquisition Naftogaz by Gazprom. Azarov said Ukraine did not need discounts, just a fair contract.
"We have all reasons for proposing to the Russian government to hold talks on gas supplies and transit terms in accordance with the intergovernmental agreement (of 2004). We have sent a letter on the matter," Azarov said.
Ukraine and Russia have a long history of disputes over gas contracts, which have in the past led to Russia cutting off supplies to Ukraine, which then cut off transit to European client nations.
