UPDATE 1-Ukraine to halt use of gas intermediaries-PM

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By Natalya Zinets

KIEV, Feb 2 (Reuters) - Ukraine is to halt gradually the use of all intermediaries in importing gas as they are ineffective and destructive to the country's industry, Prime Minister Yulia Tymoshenko said on Saturday.

Tymoshenko, long an opponent of intermediaries, said the National Security and Defence Council, chaired by President Viktor Yushchenko, took the decision on Friday. Intermediaries include the Swiss company RosUkrEnergo which supplies gas from Russia.

"A decision was taken to move away from the services of the companies RosUkrEnergo ... and other intermediaries, which are absolutely ineffective and destructive for Ukraine's gas transport system, and to move towards direct contracts," she told a news conference.

Talks on the matter, she said, would "involve the government and will take place gradually in order not to destabilise any of the processes, including the transport of gas across Ukraine's territory and transit".

She gave no indication with whom the talks would be held or over what period.

"The president supported the start of talks by the government with countries which, in one way or another, deal with Ukraine in terms of supplying gas," she said. "I cannot tell you now how long this will take. We will perhaps be able to do this after at least the first round of talks is completed."

RosUkrEnergo has been in place as a supply intermediary since Russian gas giant Gazprom (GAZP.MM: Quote, Profile, Research) imposed the first in a series of steep increases in the price of gas for Ukraine in early 2006. A price dispute then briefly halted supplies and disrupted flows to Gazprom's European customers.