January 17, 2008 / 3:00 PM / 12 years ago

UPDATE 1-Ukraine, Gazprom hold gas talks as fears mount

MOSCOW, Jan 17 (Reuters) - Ukraine’s energy executives met the chief of Russian gas export monopoly Gazprom (GAZP.MM) on Thursday as Ukraine’s new government seeks to revise the terms of gas agreements with Moscow amid mounting debt.

Russia, which suplies one quarter of Europe’s gas needs, ships four-fifths of its exports to Europe via Ukraine. Europe closely watches gas price disputes between Kiev and Moscow, as they can lead to transit supply cuts.

In December, Gazprom agreed to increase charges for gas supplies to Ukraine by 38 percent, only weeks before the arrival of the new government, led by Yulia Tymoshenko.

Tymoshenko, who is wary of Moscow, promised to eliminate all intermediaries in gas trade with Russia soon after her appointment, but refrained from tough action before the New Year.

On Wednesday, Russian business daily Kommersant quoted Ukrainian First Deputy Prime Minister Alexander Turchinov as saying Oleg Dubina, the new head of Ukraine’s state energy company, Naftogaz, will raise the issue of intermediaries and higher fees for Russian gas transit at talks with Gazprom.

Gazprom said its chief executive Alexei Miller met Dubina on Thursday. “It was a get-acquainted meeting,” Gazprom said in a statement.

Russian media reported that Tymoshenko is due to arrive in Moscow for talks on Jan. 23 in the first official visit since her appointement, though her office would not confirm that.

“We expect the negotiations to be no less difficult than in the past. In the meantime, we anticipate a lot of nervy newsflow on the topic,” Deutsche Bank said in a research note.

Tymoshenko has long criticised the role of intermediary firm RosUkrEnergo, half controlled by Gazprom, as an opaque company that increases the cost of gas transit and has said Gazprom needs to deal direct with Naftogaz.

Under the December deal, Gazprom will sell gas to Ukraine via RosUkrEnergo at $179.5 per 1,000 cubic metres in 2008 and pay Ukraine $1.7 per 1,000 cubic metres for the transit of gas per 100 km, up from the previous $1.6.

Kommersant quoted industry sources as saying Ukraine wants to steeply raise transit fee payments to $9.32.

Gazprom declined to comment on the report but said it had registered a steep rise in debt from RosUkrEnergo.

RosUkrEnergo said in turn its joint venture with Naftogaz, UkrGazEnergo, which sells gas in Ukraine, owed it $830 million for supplies of Russian gas. (Editing by William Hardy)

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