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Ukraine should pay a market price for Russian
Ukraine should pay a market price for Russian gas, and in the first quarter of 2009 the price for Eastern Europe is about $470 per 1,000 cu m, the Russian energy giant Gazprom said Friday.

"If the price for gas Gazprom supplies to Eastern European states neighboring Ukraine is around $470 per 1,000 cu m in the first quarter of 2009, then Ukraine should also pay the market price for gas," Gazprom spokesman Sergei Kupriyanov told journalists.

Kupriyanov said Gazprom's position is the same as the position of the Russian president and government. "Russia and Ukraine should switch over to market relations in the gas sphere," he said.

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.

Hungary, Serbia, Macedonia, Croatia, Bulgaria, Turkey, Greece, Bosnia, Italy, Poland, France, Slovenia, Austria, the Czech Republic, Romania and Slovakia were affected by the gas dispute.

Gazprom earlier offered Ukraine a price of $250 per 1,000 cu m for gas in 2009, about half the current average price in Europe. Russian Prime Minister Vladimir Putin said the price was tantamount to "humanitarian aid." Ukraine, which paid $179.5 last year, said it was prepared to pay $200-235 per 1,000 cu m. After the refusal, Gazprom said the price could be $418.

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

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.

Gazprom said Friday the largest gas consumers in Europe will soon sign a Gazprom-drafted protocol on the establishment of a multilateral commission to monitor gas transit via Ukraine.

The first group of international observers who will monitor Russian gas transit arrived in Kiev Friday. Russia earlier said it will not resume gas supplies to the European Union until an international mission starts monitoring gas transit through Ukraine.

The current gas dispute 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 Thursday Russia is ready to pay a market price for gas transit via Ukraine if Kiev pays a market price for supplies of Russian gas.

"We believe Ukraine should pay a market price, and we are ready to pay a market transit," the Russian premier told foreign journalists. "The market transit [rate] in Europe is $3.4 for 1,000 cu m per 100 km."

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. But 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.

Putin also said Thursday 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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