No immediate Ukraine gas row rating impact: Fitch

LONDON (Reuters) - The Russia-Ukraine gas row is not an immediate threat to the credit ratings of either country or of downstream European gas consumers, ratings agency Fitch said on Tuesday, although it is watching the spat as part of Ukraine's wider economic crisis.

Fitch director of sovereigns group Andrew Colquhoun said any increase in the price paid by Ukraine for Russian gas would worsen Ukraine's creditworthiness, but it would take a sharp move to hit the country's current "B+" rating

"It's definitely a second order consideration for the Ukraine rating," he told Reuters in a telephone interview.

"I'd be paying much more attention to the banking crisis there as well as what is going on in the global economy. But obviously the higher the gas price they are paying, the worse for the credit picture."

Fitch has Ukraine on a negative outlook.

Russian state-controlled gas giant Gazprom halted supplies to Ukraine on New Year's Day in a dispute over gas bills and pricing for 2009, disrupting supplies to other European consumers.

"In terms of downstream user countries, we wouldn't see any immediate ratings impact," Colquhoun said.

"Many of them have got used to this annual gas dispute and built up reserves accordingly."

He also saw no immediate impact from the row on Russian sovereign credit worthiness.

"Ultimately, both Ukraine and Russia benefit from the profits from gas sales to the European Union and have a vested interest in sorting out the dispute," he said.

Gazprom is demanding that Ukraine pay $450 per 1,000 cubic meters, up from $179.50 in 2008.

"Our (Ukraine) rating pencils in the gas price at around $250 per 1,000 cubic meters," Colquhoun said.

"Anything above that will be broadly negative, although it would have to be substantially higher to be material from a ratings viewpoint.

"Of course, we would have to look at the detail of the agreement eventually reached, including what financing was in place either from the Russians or from anyone else, although at the moment market financing seems unlikely."

He said every $10 per 1,000 cubic meters added to the price would likely take around half a percent of projected 2009 gross domestic product to the gas bill, hurting consumers, the government or both as well as worsening the current account deficit.

Ukraine's currency slumped in value in December as the global financial crisis slashed steel prices, damaged the banking sector and prompted capital flight. Ukraine agreed a $16.5 million loan from the International Monetary Fund in November to prop up the economy.

But analysts predict recession and further economic pain.

"There is already a pretty bleak macroeconomic picture factored into the Ukraine rating so the gas price shock would have to be really severe for us to have to take further action," Colquhoun said.

(Editing by Ruth Pitchford)