Ukraine needs energy plan for Russia ties: U.S. official

KIEV (Reuters) - Ukraine could change its entire relationship with Russia if it takes tough decisions on energy that would make it less dependent on gas from its former Soviet master, a senior U.S. administration official said on Tuesday.

"If Ukrainians were able to get to the level of Poland in terms of energy efficiency then they would be able to significantly cut their needs for gas imports," said the official, speaking on condition of anonymity.

Ties between the ex-Soviet neighbors sank after Ukraine's 2004 "Orange Revolution." Kiev has sought closer integration with the West and has accused Russia of exerting power over the region through its grip on the energy sector.

"If that (reduce gas imports) were to happen, then that would significantly change Ukraine's relationship with Russia," the official said.

Ukraine has had repeated rows with Russia over increasingly expensive gas prices and the latest disputes led to supply cuts to millions of Europeans in winter earlier this year.

The European Union, Russia and international financial organizations are in talks with Ukraine to provide what the official described as "significant investments" to help upgrade its gas transit system and pay for storage gas in advance.

The EU gets a fifth of its gas needs from Russia via Ukraine and in wintertime Ukraine must store extra gas to ensure smooth transit toward the bloc.

But in return the EU wants Ukraine to modernize and make transparent its energy sector and to increase prices for Ukrainians to ensure the viability of state energy firm Naftogaz, frequently at the center of spats with Russia.

"If all this goes forward, the entire nature of the energy system will change here (in Ukraine)," the official said.

(Reporting by Sabina Zawadzki)