December 19, 2008 / 5:26 PM / 11 years ago

UPDATE 1-Ukraine leader calls for cut in Russian gas price

(Adds details, further quotes)

KIEV, Dec 19 (Reuters) - Ukraine’s President Viktor Yushchenko, whose cash strapped country faces possible increases in the price it pays for Russian gas, made known on Friday that he thought there should be a price cut next year instead.

Yushchenko believes Ukraine should pay $100 per 1,000 cubic metres for Russian gas in 2009, his press secretary said on Friday.

Ukraine, which paid $179.50 in 2008, is engaged in difficult talks with Russian gas export monopoly Gazprom (GAZP.MM) on prices and supply for next year.

Gazprom executives said on Thursday that Ukraine had paid $800 million of arrears of total debts of more than $2 billion for gas and warned that they would cut off the ex-Soviet state if it failed to make good on all debts by the year-end.

Press secretary Iryna Vannikova, in a statement posted on the presidential Web site, said Yushchenko disputed suggestions by Russian officials that the price, now the subject of prolonged negotiations, should be pegged at $250-$300.

“The president is concerned at figures being cited by varoius Russian officials about the price of gas being set at $250-300,” Vannikova said.

“Such a price does not reflect the true state of affairs.... At the moment, specialists see the economically justified price at $100. This level corresponds to world principles of setting prices.”

Yushchenko plays no direct role in the negotiations, which are the responsibility of Ukraine’s government under Prime Minister Yulia Tymoshenko.

Tymoshenko and her Russian opposite number, Vladimir Putin, agreed in October on a three-year transition to world prices, though Gazprom has spoken of steeper increases next year.

Gazprom Deputy Chief Executive Alexander Medvedev said on Thursday he expected the average European price to fall to $260-$300 in 2009.

Ukraine, which has received a $16.5 billion IMF loan, faces a sharp economic downturn, a free fall of its currency, which has lost half its value since September, and a bitter political battle between the president and premier.

Russia supplies Europe with a quarter of its gas needs and 80 percent of this passes through pipelines across Ukraine, so European Union countries watch watch all pricing and debt disputes between Moscow and Kiev closely.

A previous row briefly led Russia to cut gas supplies to Ukraine in early 2006, with a knock-on impact in other European countries notably including Italy. (Editing by Anthony Barker)

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