MOSCOW, December 4 (RIA Novosti) - Russia could reduce natural gas supplies to Ukraine if the country fails to pay its debt on time, Prime Minister Vladimir Putin said on Thursday.
"If our partners do not fulfill agreements, we will have to reduce supplies. What else can we do?" Putin said in a live televised question-and-answer session, adding that Moscow would notify European consumers of any such decisions.
Russian energy giant Gazprom last month quoted Ukraine's outstanding debt at $2.4 billion. Some of the funds have reportedly been repaid, but Gazprom has demanded full payment, and threatened supply cuts.
Ukraine transits about 80% of Russia's Europe-bound gas.
The countries have also agreed on a gradual shift to market gas prices. Ukraine currently pays $179.5 per 1,000 cubic meters for gas imported from Russia or via Russian territory.
Gas supplies have been a thorny issue in recent years, triggering bitter rows between the two former Soviet republics. A pricing row between the countries at the start of 2006 led to a brief cut in supplies to Ukraine. Some consumers in Europe reported supply shortfalls during the dispute.
Putin pledged further efforts to improve ties with Kiev, which he said must be fair and based on market principles. "Fair relations means market relations," he said.
Ukraine's pro-Western president moved earlier this week to heal a rift with Russia, its largest trade partner, in the face of the ongoing financial crisis. Moscow has welcomed Viktor Yushchenko's decision to set up a high-level group to improve ties with Russia.
Other issues that have soured relations between the former Soviet republics in recent years include Ukraine's bid to join NATO and Russia's Black Sea Fleet base in Ukraine's Sevastopol.
