Russia gas deal to bolster Ukraine PM, avoid price

MOSCOW (Reuters) - Ukraine's Premier Yulia Tymoshenko will sign a gas deal with Moscow on Thursday aimed at showing Russia's support for her government without any mention of a final gas price, Interfax news agency reported on Wednesday.

"This agreement is of political nature and aims to support the government of Yulia Tymoshenko," Interfax quoted an informed source in Moscow as saying.

Tymoshenko, locked in negotiations to form a new ruling coalition, has been accused by critics at home of turning to Moscow for political support after earlier criticizing the Kremlin.

The Russian government said this week that Tymoshenko and her Russian opposite number, Vladimir Putin, will discuss on Thursday "various aspects of trade and economic cooperation, and also mutual activities in the energy sphere".

In Kiev, Tymoshenko told journalists that ministers had approved a framework for the talks which implement President Viktor Yushchenko's order for a long-term gas accord.

"I hope that we can sign the agreement, but I would be cautious about any predictions because the talks will be difficult," she said.

"There is no doubt that there will be a price increase, because we are gradually, year after year, moving toward a market price."

Ukraine is heavily dependent on gas imports from Russia, with prices for 2009 still under negotiation.

Europe closely watches gas talks between Russia and Ukraine after a pricing dispute briefly cut transit supplies of Russian gas to Europe in January 2006.

Russia supplies a quarter of Europe's gas and its gas export monopoly Gazprom (GAZP.MM) has warned Kiev that prices for Ukraine will more than double in 2009 after oil prices rose to a record earlier this year.

Ukraine currently pays $179.50 per 1,000 cubic meters or less than half of average European prices. Tymoshenko said last week that a price of $400, as suggested by Gazprom, would be an "absolute shock" for Ukraine's economy.

(Reporting by Dmitry Zhdannikov and Ron Popeski in Kiev)