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Russia is ready to pay a market price for gas transit
Russia is ready to pay a market price for gas transit via Ukraine if Kiev pays a market price for supplies of Russian gas, the Russian prime minister said Thursday.

"We believe Ukraine should pay a market price, and we are ready to pay a market transit," Vladimir Putin told foreign journalists.

"The market transit [rate] in Europe is $3.4 for 1,000 cu m per 100 km," Putin said.

Russia paid $1.6 for 1,000 cu m per 100 km in 2008 in line with a contract valid until the end of 2010. In response to a claim by Ukraine's energy ministry, the Kiev economic court ruled Monday that Ukrainian energy company Naftogaz could not pump Russian gas westwards at a price of $1.6 for 1,000 cubic meters per 100 kilometers.

The premier said mechanisms to monitor Russian gas transit to Europe should be created as soon as possible to ensure the energy security of European consumers.

Putin showed journalists documents, drafted by independent foreign company SGS, proving Ukraine illegally siphoned off Russian Europe-bound gas.

"There is proof," he said and presented the documents, when asked what data Russia had on gas tapping by Ukraine.

Russia and Ukraine failed to agree on New Year's Eve on how to settle Kiev's gas debts or on a contract for 2009 deliveries. As a result, gas supplies from Russia to European consumers through Ukraine were reduced and then halted, affecting in particular Hungary, Serbia, Macedonia, Croatia, Bulgaria, Turkey, Greece, Bosnia, Italy, Poland, France, Slovenia, Austria, the Czech Republic, Romania and Slovakia.

Around 80% of Russia's gas exports to Europe pass through Ukraine.

Russian energy giant Gazprom earlier accused Ukraine of stealing more than 86 million cubic meters of gas since the start of the year, but Kiev denied the accusations saying that Russia was trying to discredit Ukraine as a reliable gas transit partner.

The situation has reawakened concerns in Europe about the reliability of Russia as an energy supplier.

The 2006 gas row between the two former Soviet states resulted in a brief cutoff in supplies to Ukraine. When shortages were reported in some Eastern European countries, Russia accused Ukraine of siphoning off Europe-bound gas.

Putin said the situation with gas transit through Ukraine should not result in deteriorating relations between Russia and the EU.

"If Europe has an objective understanding of what is going on, then today's... dramatic events in the energy sphere should not lead to a deterioration of relations with Russia, as Russia is not to blame for this," he said.

Putin said Russian gas transit via Ukraine should be in line with civilized market principles and with norms of international law.

Asked how to resolve the gas dispute, he said: "The mechanism is very simple - the transit contract. I will repeat, this contract is subject to Swedish law."

Putin said the sides should turn to the Stockholm Arbitration Court if there are any problems. "This is the most civilized way," he said.

Both Gazprom and Naftogaz earlier said that they will file lawsuits with the Stockholm Arbitration Court, which deals with international commercial legal disputes. On Monday, the court said it could not comment on whether it was considering lawsuits from either party in the gas dispute.

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