MOSCOW, May 18 (RIA Novosti) - Russia is ready to participate in and partially finance the modernization of Ukraine's natural gas pipeline system, the Russian energy minister said on Monday.

Russia has said work to modernize the system could cost up to $16 billion, far more than Ukraine's estimates. Ukraine and the EU sparked anger in Russia earlier this year after reaching a deal to modernize the network without Russian participation.

"We are prepared to partially finance this work," Sergei Shmatko told reporters in Moscow.

"I have heard the Ukrainian premier voice an assessment of 5-6 billion euros. According to our estimates, this sum should be twice as high."

Shmatko also said that Russia is not planning on joining the Ukraine-EU declaration signed on March 23.

"This is a two-party agreement and we don't see any reason to join it," Shmatko said.

Following Russia's exclusion from the agreement, Prime Minister Vladimir Putin threatened to review relations with the EU. The Foreign Ministry warned that if Russia was not involved, then both Ukraine and Europe could expect gas price hikes.

Later, both Ukraine and the EU said they would welcome Russian participation in the modernization work.