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Ukraine's energy minister to continue gas talks in Moscow

KIEV, September 13 (RIA Novosti) - Ukraine's fuel and energy minister has left for Moscow on his second visit this month to discuss Russian natural gas supplies with energy giant Gazprom [RTS: GAZP], the ministry said Wednesday.

Russia is Ukraine's leading natural gas supplier, but dialogue in the gas sector has been complicated by Gazprom's raising of natural gas prices to market levels as of 2006, and by a recent political crisis that befell Russia's neighbor in the past six months.

Yuriy Boiko met with Gazprom Chief Executive Alexei Miller last week, and the parties agreed on how to resolve Ukraine's gas deficit in the fourth quarter. They also discussed Russian natural gas deliveries to Europe through Ukraine in the winter of 2006-07.

During a price dispute with Ukraine in January, Russia briefly cut off gas supplies to Ukraine, and Gazprom later accused Ukraine of siphoning off Europe-bound gas during the embargo. The situation aroused concerns in Europe about Russia's reliability as a gas supplier.

The price of natural gas has been a contentious issue with Russia during West-leaning President Viktor Yushchenko's time in office since 2004. It is also an important factor for Ukraine's economy, which is driven largely by the fuel-intensive heavy industry.

Ukraine currently imports a mixture of Russian and Turkmen natural gas at $95 per 1,000 cubic meters. The price formula is based on a European rate of $230 for Russian gas and $60 for the Central Asian republic's gas. But Gazprom agreed to a 50% price rise, to $100 per 1,000 cubic meters, for its supplies from Turkmenistan last week.

Boiko's mission is to make proposals that ensure stable natural gas supplies to Ukraine in late 2006-2007, and to propose gas prices acceptable to both countries. But he ruled out transferring the management of Ukraine's gas transportation system to Gazprom in exchange for price concessions from the Russian state-owned energy giant, an idea that some in Russia have floated, particularly after the price dispute over the winter.

The ministry's press service said Boiko would also meet with Andrei Rappoport, a board member of Russian energy monopoly Unified Energy System.

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