- The Washington Times - Saturday, December 31, 2005

MOSCOW — Russia’s state-controlled natural gas monopoly said early today that Ukraine had refused its last offer on the terms of natural gas deliveries and transit in 2006, setting the stage for Moscow to close the taps on New Year’s Day.

The announcement came after a midnight deadline that Gazprom and President Vladimir Putin had given Ukraine to decide on what price it would pay next year.

Gazprom spokesman Sergei Kupriyanov told the Associated Press that Gazprom had sent its Ukrainian counterpart a signed contract offering the terms Mr. Putin had offered hours earlier: to maintain Ukraine’s current fuel price for three months if Kiev agreed to pay more thereafter.

Mr. Putin said his offer was only valid until the end of the day — 10 hours before a threatened cutoff of supplies to Ukraine.

“We received an official answer from the Ukrainian side,” Mr. Kupriyanov said. The answer said: “‘We cannot sign it,’ and that is all.”

His statement put a cap on a day of conflicting statements from Moscow and Kiev. Ukraine’s TV5 late yesterday had carried a statement by the Ukrainian gas company, Naftogaz, that “the leaderships of NAK Naftogaz and OAO Gazprom have agreed over the telephone to unchanged prices of natural gas and gas transit for the first quarter of 2006.”

But it did not answer the key question of what price Naftogaz would pay after that.

The Interfax news agency quoted Ukrainian Fuel and Energy Minister Ivan Plachkov as saying that Ukraine and Russia “will sign an appropriate set of documents during the first four months of 2006.”

“That will be followed with final agreements on price formulas and fees for the transit of Russian gas through Ukraine,” he was quoted as saying. “There will be gas.”

Gazprom is demanding that Ukraine pay $230 — more than four times the current price of $50 — per 1,000 cubic meters of gas, and vowing to halt supplies to Ukraine this morning unless an agreement is reached.

Ukraine wants an increase that would bring what it pays closer to world prices to be phased in gradually. President Viktor Yushchenko said late Friday that the most it is willing to pay now is $80.

The showdown has underlined the tension boiling between the historically linked, mostly Slavic ex-Soviet republics since the West-leaning Mr. Yushchenko — who wants to reduce Moscow’s clout in his country — beat his Russian-backed rival in a bitter electoral battle a year ago.

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