Ukraine rejected Russian state natural-gas exporter OAO Gazprom s offer to guarantee supplies of the fuel in exchange for a stake in the country s pipeline network

Ukraine rejected Russian state natural-gas exporter OAO Gazprom’s offer to guarantee supplies of the fuel in exchange for a stake in the country’s pipeline network, Ukrainian Prime Minister Yuriy Yekhanurov said.

‘‘Ukraine will not sell its gas pipeline system,’’ Yekhanurov said in Zhytomyr, northern Ukraine, in remarks broadcast by Channel 5 television. ‘‘It’s prohibited by law.’’ Ukraine, which gets about of a quarter of its gas from Gazprom, has been resisting demands to pay $ 230 per 1,000 cubic meters of natural gas, more than quadruple the $ 50 the country pays now. Gazprom, which supplies about a quarter of western Europe’s, mainly via Ukraine, plans to cut deliveries to the country at 10 a.m on Jan. 1 if no agreement is reached. Gazprom will continue to negotiate with Ukraine until then, the company’s press service said.

Ukraine will appeal to the international arbitration court in Stockholm if Gazprom cuts deliveries, Yekhanurov said at a Cabinet meeting Dec. 23. Gazprom itself will sue Ukraine in Stockholm if Ukraine siphons off gas being shipped to Europe, Deputy Chief Executive Officer Alexander Medvedev said yesterday on state television.

Ukraine imports about 80% of its oil gas, mostly from Russia and Central Asia. The former Soviet state receives gas from Russia as payment for shipping supplies to Europe. Gazprom is also demanding that Ukraine return 1.63 billion cubic meters of gas, Ukrainian Fuel and Energy Minister Ivan Plachkov said in an e-mailed statement. Gazprom doesn’t have the right to make that demand without first agreeing to increase shipments across Ukraine to Europe and pay higher transit fees, Plachkov said, without elaborating. Gazprom’s press service denied that the company issued such a demand.

Plachkov said Gazprom has an agreement with Ukraine’s state- owned energy company NAK Naftogaz Ukrainy ‘‘to increase gas shipments to via Ukraine to 120 billion cubic meters in 2005,’’ which it hasn’t done. That ‘‘undermines Ukraine’s gas balance and contradicts the agreement.’’ Gazprom boosted exports 9.1% to 154.1 billion cubic meters of gas in the first 11 months of the year, including 100.4 billion cubic meters to western Europe, a 3.9% increase. Sales to former Soviet states more than doubled to almost 15 billion cubic meters, including Ukraine, where sales tripled to 7.3 billion cubic meters.

Source : www.financialexpress.com