Moscow has given up the idea of dragging Ukraine into its customs union in return for gas price discounts, and is ready to discuss a gas transit consortium with Ukraine and the European Union, Kommersant business paper reported on Monday, a day after Ukrainian President Viktor Yanukovych claimed there had been progress during talks over gas prices.
Yanukovych, who has said on many occasions that the current gas price formula with Russia is unfair and has been seeking to revise the 2009 gas contract, held a meeting with Russian President Dmitry Medvedev and Prime Minister Vladimir Putin on Saturday to settle the long-running deadlock.
Following the meeting, the Ukrainian president's press office said that "considerable progress had been reached during the negotiations" but declined to elaborate, while a senior Ukrainian diplomat told the paper that the issue of Ukraine's membership in the Customs Union could now be considered as closed.
"Kiev is not going to get integrated into the Customs Union. Look at our president: He will not yield to pressure," the paper quoted the diplomat as saying.
In August Medvedev said Ukraine could get gas price discounts if it joined the Russian-led Customs Union, or made an attractive offer for its gas transport system. Kiev, reluctant to become a full member of the union as it would rule out signing a free trade agreement with the European Union, offered Moscow a trilateral gas consortium with the EU. Moscow did not welcome the idea at that time.
Now Moscow seems to look at this option more favorably, the Ukrainian diplomat told the paper.
"There will be progress on the issue of the gas transportation system but it will take time. I believe we'll find a compromise based on a trilateral consortium," the diplomat told the paper, adding that Russian gas export monopoly Gazprom, Ukrainian state-run energy firm Naftogaz and also Russian and Ukrainian government officials would meet in October to discuss the consortium.
Ukraine wants 34 percent in the consortium, leaving 33 percent each for Russia and the EU. This option is not bad for Russia, if a European friendly company becomes Gazprom's partner in a new joint venture; the paper quoted Valery Borovik from the New Energy of Ukraine alliance as saying.
"However, considering problems in EU member states, namely, a new wave of the financial crisis, hardly any additional funds could be found there to modernize our gas transportation system and this is what embarrasses the Russians: they'll let Europeans into the joint venture but will have to modernize the gas pipelines at their own expense," Borovik told the paper.
Yanukovych announced significant progress in the Russian-Ukrainian gas agreement talks on Saturday, Ukrainian UNIAN news agency reported on Sunday.
"Significant progress was made during the negotiations, which gives hope of achieving concrete results soon in the best interests of both countries," Ukrainian administration said citing Yanukovych.
The Kremlin also announced substantial progress. "Certain agreements were made during yesterday's talks between Russian President Dmitry Medvedev and Ukrainian President Viktor Yanukovych," Russian presidential spokeswoman Natalya Timakova said.
