UPDATE 1-Ukraine tells Russia not to use natural gas as a "weapon"

Tue May 13, 2014 11:29am EDT

* Ukraine prime minister says ready for market approach

* Yatseniuk repeats threat to take Gazprom to court

* Accuses Russia of stealing billions of dollars of gas (Adds quotes, background)

BRUSSELS, May 13 (Reuters) - Ukrainian Prime Minister Arseny Yatseniuk urged Russia on Tuesday not to use natural gas as a "weapon" against his country, and accused Moscow of seizing tens of billions of dollars' worth of its assets and energy resources in Crimea.

Russian energy giant Gazprom earlier demanded a $1.66 billion pre-payment from Kiev for June gas deliveries, saying Ukraine had only half its requirements in storage to ensure a trouble-free winter.

"We are ready for a market-based approach and Russia is to stop using natural gas as another, or a new type of Russian weapon," Yatseniuk told a news conference with European Commission President Jose Manuel Barroso in Brussels.

Ukraine wants to change the conditions of a 2009 contract that locked Kiev into buying a set volume of gas, whether it needs it or not, at $485 per 1,000 cubic metres - the highest price paid by any client in Europe.

Moscow dropped the price to $268.5 after then-President Viktor Yanukovich turned his back on a trade and association agreement with the European Union last year, but reinstated the original price after he was ousted in February.

Kiev has so far refused to pay the higher price, saying gas is being used as a political tool by Moscow to punish Ukraine's new leaders for moving closer to the EU.

Yatseniuk said Ukraine was ready to pay its arrears for Russian gas within 10 days if state-controlled Gazprom agreed to sell it at $268 per 1,000 cubic metres.

But he repeated a threat to take Gazprom to an arbitration court in Stockholm if the two sides failed to agree on a price by May 28, and said he was making a "final call" to Russia to sit down and negotiate a solution to the gas dispute.

Yatseniuk accused Russia of seizing Ukrainian property worth tens or even hundreds of billions of dollars, including Crimean gas company Chernomorneftegaz, when it annexed the region in March.

"They have stolen more than 2 billion cubic metres of Ukrainian natural gas. They've stolen our fields, they have stolen our companies, they have stolen our onshore and offshore drills. We will see Russia in court too," he said. (Reporting by Jan Strupczewski and Adrian Croft, Editing by Martin Santa and David Stamp)

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