* Russia and Ukraine to restart gas talks on Jan. 15
* No deadline for talks
* Gazprom links South Stream project to talks with Ukraine
By Vladimir Soldatkin
MOSCOW, Dec 26 Ukraine and Russia will
renew gas talks on Jan. 15, Russia's Gazprom said on
Monday, as they strive to avert a standoff over pricing, which
in the past has led to supply cuts and gas shortages in Europe
during New Year holidays.
Both countries have pledged to ensure steady gas flows to
the Europe Union, which relies on Russia for one quarter of its
gas supplies, despite differences over pricing and the ownership
of Ukraine's strategic gas pipeline system.
Kiev and Moscow have been locked in difficult gas talks for
the past year as Ukraine, whose fragile economy is suffering
from a budget deficit, seeks a cut in the cost of Russian gas,
which is set to rise to $416 per thousand cubic metres (tcm) in
the first quarter of 2012 to match what the EU is paying.
The price is currently around $400 per thousand cubic metres.
Ukrainian President Viktor Yanukovich said last week he
considered $250 per tcm the highest acceptable price.
But Russia has been adamant in saying Ukraine must stick to
the multi-year contract signed in 2009. Moscow also faces a
budgetary squeeze next year as it is set to embark on a public
spending spree ahead of March 4 presidential elections, which
Prime Minister Vladimir Putin is poised to win.
On Friday, Gazprom Chief Executive Officer Alexei Miller and
Ukrainian Energy Minister Yury Boiko met in Russia's
second-largest city of St. Petersburg.
"The participants have taken note of the positive and
constructive character of the 2011 talks and good perspectives
for the next round of talks, which will take place on Jan. 15,"
Gazprom said in a statement on Monday.
Unlike 2009, there is no clear deadline for a deal, which is
seen as important to securing shipments of gas to Europe by
establishing a price and joint control of the transit pipelines
that carry more than half of Russian gas deliveries to the EU.
But Gazprom has little incentive to hurry a deal while it
stands to gain leverage in the talks as Ukraine's fiscal
position worsens. It also continues to collect the higher price
stipulated in the current contract in the meantime.
GAS PIPELINES AT STAKE
Prior to the November launch of the Nord Stream gas
pipeline, which started to pump gas directly to Germany along
the Baltic Sea bed at a yearly rate of 27.5 billion cubic
metres, Ukraine used to tranship around 80 percent of Russian
gas to Europe.
The rest passed through Belarus, which last month agreed to
cede its gas pipeline operator Beltransgaz to Gazprom in return
for cuts to gas prices, which will average at $164 per tcm in
Russia would be glad to take over the gas pipeline system in
Ukraine as well, but the idea has met with public outrage and
fierce opposition in Kiev.
According to Russian Energy Ministry sources, Moscow offered
to split pipeline ownership equally between Kiev and Moscow. A
proposal also to include EU companies is on the table.
Nord Stream will double its capacity to 55 bcm a year when
the second stage is commissioned by the end of 2012, further
weakening Ukraine's position in the talks.
Moscow is also pushing forward with plans to build the 15.5
billion euro South Stream pipeline, a rival to the EU-backed
Nabucco project, to carry 63 bcm of gas a year to Southern
Europe via the Black Sea from 2015, in order to bypass transit
countries such as Ukraine.
Gazprom Chief Executive Alexei Miller said on Monday that
the implementation of the South Stream project hinges on gas
talks with Ukraine.
"South Stream has always been linked to Ukraine," he said.
A source in the Russian Energy Ministry told Reuters that
Russia expected Turkey to give its a nod to the pipeline to pass
through its waters. Ankara's prior refusal to give South Stream
the green light has been a stumbling block for the project.
A Russian delegation is due to meet with Turkish
counterparts on Tuesday to discuss energy issues.
"South Stream will effectively kill off the need to acquire
Ukraine's gas transit system," the source said.
(editing by Jane Baird)