Russia, Ukraine better equipped to avoid gas row

Members of a right-leaning youth group hold a pipe during a protest in front of the Russian embassy in Kiev January 14, 2009. The words on the pipe read: ''A pipe for you, Russia'', which is a figure of speech that means: ''You are done with, Russia''.

MOSCOW (Reuters) - Russia is better placed to avoid a new winter gas row with Ukraine after signing separate deals with Kiev on supply and transit, though disruptions cannot be completely ruled out, a senior Gazprom executive said on Friday.

Gazprom also aims shortly to agree with Turkmenistan on a mechanism allowing Central Asia's largest gas producer to resume deliveries to Russia following a pipeline blast five months ago that provoked a furious response from the Turkmen government.

"We can't consider relations in the gas business as a zero-sum game," Gazprom (GAZP.MM) Deputy Chief Executive Alexander Medvedev told the Reuters Russia Investment Summit.

European customers, dependent on Russian deliveries via Ukraine for a fifth of their gas, were left in the cold for two weeks in January when Moscow and Kiev argued over pricing and transit.

"It was not a crisis of supply. It was a crisis of transit," Medvedev, Gazprom's export chief, told Reuters.

He said both sides were better equipped to avoid a repeat. Relations between the ex-Soviet neighbors appear to be warming after Prime Minister Vladimir Putin agreed Kiev could buy less gas than planned without sanction.

"Now, we have a better environment. We have first-class contracts, separate contracts for supply and transit," Medvedev said. "We also saw that international financial institutions did their job by not allowing the Ukrainian economy to collapse."

Kiev has clinched a deal with the International Monetary Fund that has allowed it to pay for gas supply and storage. Ukrainian Prime Minister Yulia Tymoshenko says Kiev has enough gas stored to ensure smooth transit to Europe.

"If everything were to depend on us, we would say with 100 percent certainty it would not happen," Medvedev said, when asked if he expects any difficulties with Ukraine this year.

"But we can't avoid the risk. In order to be prepared, we should carefully analyze all these risks," he said. "Hopefully history will not be repeated."

TURKMEN SUPPLIES

When Russian President Dmitry Medvedev visits Turkmenistan, holder of the world's fourth-largest gas reserves, on Sunday, energy is expected to top the agenda.

Turkmenistan has made overtures to European gas buyers since a pipeline blast in April cut off supplies to Russia. Ashgabat, which has lost billions of dollars in export revenues as a result, blamed Russia for the blast, a charge Gazprom denies.

Gazprom's Medvedev called the accident "unfortunate" and said he was confident the two countries would soon reach an agreement on the resumption of Turkmen gas flows.

"We are trying to find a good basis for a contract that will work on a stable and predictable basis," he said. "We are very close to finalizing this."

He added: "We are acting based on a valid contract. We should keep in mind that we are in the middle of the heaviest economic crisis in the history of the gas market.

"You can't have one side benefiting from the situation."

He added that one of the reasons for the problem between Russia and Turkmenistan was the absence of a clear price formula such as that which exists with Uzbekistan and Kazakhstan.

(Additional reporting by Michael Stott, Dmitry Zhdannikov, Robin Paxton, Katya Golubkova, Anton Doroshev and Gleb Gorodyankin; editing by Simon Jessop)