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Ukraine-Russia gas talks expected to resume

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Ukraine and Russia are expected to resume talks on their long-running natural gas dispute Wednesday in Moscow, Ukraine's oil and gas company Naftogaz said.
MOSCOW, March 12 (RIA Novosti) -- Ukraine and Russia are expected to resume talks on their long-running natural gas dispute Wednesday in Moscow, Ukraine's oil and gas company Naftogaz said.

The Naftogaz press service earlier said a delegation, led by company head Oleh Dubyna, had been dispatched to Moscow.

Kiev would refuse to pay over $179.5 per 1,000 cubic meters for Russian gas it has consumed in 2008, the Ukrainian prime minister said on Tuesday ahead of the talks.

The former Soviet allies partially resolved their dispute last Thursday, agreeing that Ukraine would pay off about a $1 billion of its debt and that talks would continue on a supply scheme for 2008, after Russian gas monopoly Gazprom restored supplies, which were cut by 50% March 4.

Ukraine's presidential spokesman earlier said the talks would be based on a deal reached by Presidents Viktor Yushchenko and Vladimir Putin in mid-February, when they agreed to remove intermediaries, which Kiev earlier blamed for accumulating its gas debt, and set up two joint ventures between Gazprom and Ukraine's national energy company Naftogaz.

In instructions issued to Naftogaz on Friday Yushchenko also reiterated that Gazprom's share of gas shipments and direct gas sales within Ukraine could be between 25 and 50%.

However, tensions could persist as Ukrainian Prime Minister Yulia Tymoshenko is objecting to new joint ventures being set up, insisting on direct deals between Gazprom and Naftogaz.

The latest spat between Moscow and Kiev raised fears in Europe that Ukraine could tap gas destined for European consumers to make up for the shortfall.

The former Soviet allies agreed last year to supply gas at $179 for 1,000 cubic meters in 2008 for Central Asian gas brought by Gazprom, the price for Russian gas was set at $315 per 1,000 cu m.

Ex-Soviet Central Asian states will begin exporting their gas at European-level prices from 2009, Russia's gas monopoly, Gazprom, said on Tuesday.

Gazprom currently buys Central Asian gas at lower prices than it sells to Europe. The planned increase therefore promises follow on price rises for European consumers.

Gazprom CEO Alexei Miller said earlier, citing expert estimates, that the average gas price for Europe could grow to $360 per 1,000 cubic meters by the end of 2008.

Under a contract Gazprom and Turkmenistan signed last November, the Russian company will buy Turkmen gas at $130 per 1,000 cu m in the first half of 2008 and $150 in the second half of the year, and in 2009 the price is to be calculated based on market trends. Until at least 2009, Gazprom is to purchase 50 billion cu m a year from the country.

Gazprom is currently believed to be paying $180 per 1,000 cu m for Uzbek gas against $100 last year.

Russia transits 55 billion cu m of gas from both Turkmenistan and Uzbekistan via Kazakhstan under a 2005 contract. Gas from the Central Asian region is transported to Europe via Gazprom-controlled pipelines.

Russia, Turkmenistan and Kazakhstan signed a deal in December to supply the Asian states' Caspian gas via Russia, dealing a blow to the rival Western-backed Nabucco pipeline. Moscow also reached deals with Bulgaria and Serbia earlier this year on the South Stream pipeline to pump Central Asian gas to Europe.

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