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UK minister says Russia's reputation at risk in gas dispute with Ukraine

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LONDON, January 2 (RIA Novosti, Alexander Smotrov) - UK energy minister Malcolm Wicks said Monday that Russia's reputation of a reliable natural gas supplier could be hurt resulting from its unsettled dispute with Ukraine over the price for Russian gas deliveries to Ukraine.

Wicks told BBC Radio Five Live that Russia's reputation was closely linked with stable energy supplies, and it could be hurt if Russia did not meet its commitments on gas supplies to European countries.

Wicks said Russia and Ukraine should make every effort to settle the dispute in transparent negotiations, including on the price issue, thus allowing Western Europe to assess the situation and its possible impact on the European gas market.

The Russian Foreign Ministry said Sunday Russia would honor all contracts on natural gas deliveries to its European partners. "To consolidate economic security in Europe and economic cooperation on the continent, the Russian side will strictly comply with all contracts with our EU and other European partners as regards Russian natural gas deliveries," the ministry said in a statement.

The ministry said Ukraine would be responsible for possible complications in Russian natural gas transit to European markets, adding that Ukraine's gas transit obligations were stipulated in the European energy charter.

"We expect Ukraine to ensure uninterrupted natural gas transit on its territory to European Union countries in line with its international obligations and take every measure to prevent gas flowing to Europe from being tapped," the ministry said.

In the final days of 2005, Russia made several proposals to Ukraine as it said in a bid to cushion the move to the market price, which Ukraine insists is "economically ungrounded" and politically motivated.

Russian President Vladimir Putin ordered the Russian government, Saturday, to continue deliveries to Ukraine in Q1, 2006 under the 2005 terms ($50 per 1,000 cu m) if Ukraine signed December 31, 2005 a new contract, stipulating new market prices for Russian gas starting from Q2, 2006.

Russia also offered Ukraine a $3.6 billion loan to finance its gas imports in 2006, but Ukrainian President Viktor Yushchenko turned down the offer.

Russian state-run energy giant Gazprom began reducing pressure in the natural gas pipeline January 1, 2006 after Ukraine declined to sign a contract for deliveries in 2006 at the market price of $230 per 1,000 cu m. The average EU charge is $240.

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