UPDATE 1-EU to stay out of Ukraine gas merger talks

Thu May 6, 2010 3:29pm BST

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By Pete Harrison

BRUSSELS May 6 (Reuters) - The European Union will play no part in a Russian proposal that would give Moscow control over Ukrainian gas pipelines, Europe's single biggest gas import route and a key to energy security, the bloc's energy chief said on Thursday.

The EU will not get involved for the moment in Russia's proposal to merge its energy giant Gazprom (GAZP.MM) with Ukraine's Naftogaz, said EU energy commissioner Guenther Oettinger, the man in charge of the EU's energy strategy.

Russian Prime Minister Vladimir Putin stunned Ukrainians last week by offering to merge state gas giant Gazprom with Ukraine's jealously-guarded state energy firm Naftogaz.

"It's an offer and proposal from Mr Putin, (and) the decision has to be made between Kiev and Moscow, and not in Brussels," European Energy Commissioner Guenther Oettinger told journalists.

The deal would at a stroke give Moscow control over the major gas pipelines which run through Ukraine to supply Europe with about 20 percent of its gas needs. It would also give Russia a lockhold over Ukrainian domestic gas supplies.

"For today, there is no reason for any activity of the European Commission," Oettinger told reporters. "First this deal is not a European Union deal. It's a deal between owners, if it comes. Let's wait and see. It's too early."

Since the election in February of Kremlin ally Viktor Yanukovich as Ukraine's president, ties with Moscow have rapidly improved with accords on gas pricing and a lease extension for a key Russian naval base in Ukraine's Crimea.

But Prime Minister Putin's proposal was Russia's boldest move yet.

Yanukovich said on Thursday the offer had come as a suprise and Ukraine's government might not give it any thought. [ID:nLDE6451AC]

Ukrainian energy minister Yuriy Boyko said that during his meeting with Oettinger he had stressed that national interests and those of Ukraine's partners, including Europe, should be taken into account.

(Additional reporting by Charlie Dunmore, Writing by Pete Harrison, editing by Michael Hogan)