for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up
World News

Kremlin tough on gas deal ahead of Yanukovich visit

MOSCOW (Reuters) - The Kremlin on Thursday said Ukraine should stick to existing gas deals with Russia, drawing a line on a divisive issue expected to be in focus during Viktor Yanukovich’s first visit to Moscow as Ukraine’s president.

While it marks a fresh start in political ties that soured under Yanukovich’s pro-Western predecessor, the visit may be dominated by economic issues such as cash-strapped Ukraine’s bills for Russian natural gas.

Yanukovich, inaugurated last week, comes to Russia days after his first foreign trip as head of state, to Brussels, where he pledged to keep Ukraine on the reform path and ensure it remains a reliable gas transit route.

Europe, which gets a fifth of its gas needs from Russia via Ukraine, is hoping Yanukovich’s more pro-Russian stance can guarantee he will avoid repeating the price disputes which led to supply cuts to Europe in recent years.

But many analysts believe Kiev’s desperate public finances mean Yanukovich must change a long-term gas deal signed in 2009 by his election rival, former Prime Minister Yulia Tymoshenko, which made Russian gas more expensive for Ukraine than for most European countries.

“The Russian side proceeds from the need to rigorously implement all existing agreements and contracts in this (gas) sphere, taking into account the task of ensuring uninterrupted Russian gas supplies to European customers,” the Kremlin said in a statement on Thursday.

Yanukovich has pleased Russia by making clear he opposes Ukraine joining NATO, as his predecessor Viktor Yushchenko hoped it would, saying Kiev would continue only partnership programs with the Western military alliance.

“The question of our joining NATO is not on the agenda. The depth of our cooperation is enough to ensure partner-like relations with NATO,” Yanukovich said in an interview aired on Thursday on state-run Rossiya-24 television.

But analysts have said Yanukovich would have to offer Moscow bigger incentives -- such as a deal for the Russian Black Sea Fleet to stay in Ukraine’s port of Sevastopol beyond the official withdrawal deadline of 2017 -- to win a lower gas price deal.

Yanukovich has said he could allow the fleet to stay, a move Moscow sees as a certain guarantee that Kiev will not join NATO.

He also said he would revive the idea of a gas consortium that would allow Moscow and the European Union to co-manage Ukrainian pipelines.

Moscow had said it could increase supplies via Ukraine if it was allowed to co-own and manage gas pipelines, but Ukraine adopted a law forbidding their privatization.

Russia has decided to build North Stream and South Stream -- pipelines that would bypass Ukraine, delivering gas to Europe via the Baltic and Black Seas, and drastically cutting Kiev’s transit revenues.

Asked on Friday what he expects from his visit to Moscow, Yanukovich told Interfax-Ukraine: “That will be a major turning point in changing relations between our countries for the better. In all senses. You’ll see.”

In the interview televised on Thursday, however, he stressed that Ukraine must also pursue productive ties with the European Union to the west.

“Ukraine’s interests in Europe are huge. This is a huge market,” he said after he was asked why he travelled to Brussels first. “We are big trade partners. Our trade turnover with Europe is slightly bigger than with Russia given the fall in trade with Russia.”

Editing by Janet Lawrence

for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up