Ukrainian President Viktor Yanukovych suggested on Friday building the South Stream, a project aimed at diversifying Russian gas routes away from transit countries, through Ukrainian territory.
"We are suggesting a flexible approach to the construction of the South Stream. The South Stream should pass overland in the south of Ukraine," Yanukovych said at an international forum.
He said that building the South Stream through Ukraine would make it five times cheaper than the current price of 25 billion euros. A South Stream shareholder agreement is to be signed later on Friday. The Nord Stream project will start pumping gas to Europe in October, also bypassing Ukraine.
Ukraine accounts for 80 percent of Russian gas transit to EU nations but frequent rows with Moscow over gas prices sometimes end with Kiev switching the gas tap off in the middle of the winter.
Ukraine is now trying to renegotiate a 2009 gas deal with Russia, which ties the price for gas to the price for oil, which has been rising steadily.
Gazprom deputy head Valery Golubev said that building the South Stream via Ukraine was unreasonable from an economic point of view.