Yushchenko aide cautious over gas plan

A Ukrainian official representing President Viktor Yushchenko urged caution today in proceeding with proposals made by the ex-Soviet state's Prime Minister Yulia Tymoshenko to do away with intermediaries in importing gas.

Over the weekend Tymoshenko said that a meeting of Ukraine's National Security and Defence Council had agreed to gradually eliminate intermediaries, including the Swiss company RosUkrEnergo which supplies gas from Russia.

Both Yushchenko and Tymoshenko are due to visit Moscow later this month, with gas flows, and tariffs for supplies and transit to European customers, high on the agenda.

Today, the Security Council's secretary, Raisa Bogatyryova, said it was vital for all senior officials to agree in advance positions on the issue.

"The government should take note that any hasty or ill-considered actions without the elaboration of a unified consolidated position of ways to reform the gas market could cause considerable harm to that market," she told Reuters.

Bogatyryova said it was up to the government to ensure stability for Naftogaz, the cash-strapped national gas and oil company, and to ensure that all operations were free from the "additional burden" of corrupt business dealings.

In her weekend announcement, Tymoshenko dismissed RosUkrEnergo as "ineffective and destructive" for Ukrainian industry and said talks would be undertaken to move towards direct contracts with suppliers.

Yushchenko had also called for caution in weekend comments, saying Ukraine's main aim was to secure gas at the best possible price, rather than debating details of the supply network.

RosUkrEnergo has been in place as a supply intermediary since Russian gas giant Gazprom 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.

The most recent talks with Gazprom, conducted under Tymoshenko's predecessor Viktor Yanukovich, secured a price of $179.50 per 1000 cubic metres for 2008 - against $130 per Mcm last year and $90 per Mcm the year before.

Tymoshenko, back in office after a troubled seven months as premier in 2005, has long accused RosUkrEnergo of being a front for corrupt business practices. RosUkrEnergo denies that.

The premier has also vowed to ensure good relations with Russia instead of the turbulent links of her first mandate.

But she has called for a review of the price Ukraine receives for ensuring transit to Gazprom's west European customers during her forthcoming talks in Moscow.

Yanukovich had argued in favour of using RosUkrEnergo as a go-between, saying it was able to offer better prices by providing a mix of gas from Russia and ex-Soviet Central Asia.