FACTBOX-Russia's links with transit states, gas customers

April 22 (Reuters) - Russia holds the world's biggest gas reserves and is the biggest gas exporter, providing Europe with a quarter of its needs, but fractious relations with the states through which it ships supplies have alarmed many customers.

Russia has branded as parasites the transit states that have benefited from transit fees and cheap energy and it is in the process of raising the gas prices they pay to European market levels.

The process will in theory be complete by 2011, coinciding with Russia's liberalisation of domestic gas prices.

For now, the prices paid by some of Russia's neighbouring ex-Soviet states -- Ukraine, Belarus and Moldova -- are still much lower than those paid by western Europe.

Russian gas export monopoly and the world's largest gas company Gazprom (GAZP.MM) wants sales to transit states and those at home to be equally profitable with those to the rest of Europe.

Gazprom charges western Europe around $378 per 1,000 cubic metres (tcm) and prices may hit $400, a Gazprom source has told Reuters.

In March, Gazprom said it had agreed to buy gas from the former Soviet states of Uzbekistan, Kazakhstan and Turkmenistan at prices close to those it charges European customers, minus transport and other costs.

The implication is that Ukraine, which Gazprom supplies with gas bought from central Asia, must face a big increase in prices from the $179.50 per tcm it is paying Gazprom for the rest of this year.

Ukraine would still pay less than western European customers because its prices would not include transport costs.