KIEV, Sept. 26 - Russia has agreed to join a trilateral joint venture, also involving a European entity, to operate Ukraine’s massive natural gas transportation network, Prime Minister Mykola Azarov said Monday.

The joint venture would improve reliability of gas transportation from Russia via Ukraine to Europe, Azarov said in a statement released by the government.

Azarov said Russia has also agreed to revise a 10-year natural gas agreement it signed with Ukraine in January 2009, a suggestion that Russia may agree to lower prices of natural gas supplied to Ukraine.

Azarov earlier called the agreement “unfair” and “enslaving” and Ukraine has been seeking to revise the agreement during the past 18 months towards lowering gas prices.

Sergei Kupriyanov, the spokesman of Gazprom, on Monday said the parties had managed to narrow differences over the past several days, but stressed that “there is a very big work ahead of us.”

The developments come two days after a meeting between President Viktor Yanukovych and his Russian counterpart Dmitry Medvedev in Zavidovo near Moscow on Saturday.

Officials at both presidential administrations have Sunday declared “significant progress” had been made during the talks between Medvedev and Yanukovych.

The development comes three weeks before a deadline was set to expire for reaching the natural gas deal between Ukraine and Russia.

Ukraine in early September set the October 15 deadline after Russia had refused to compromise on the issue of lowering gas prices for more than 18 months.

Russia and Ukraine will have to reach the new agreement on gas prices and transit fees charged by Ukraine before the end of October, to make sure that the changes are incorporated in the draft 2012 budget before it is approved by Parliament, Dzerkalo Tyzhnia reported Monday citing a source in the Ukrainian government.

There is little information available on what exactly did Yanukovych suggest to Medvedev during their meeting on Saturday.

He was expected to offer a 33% stake to Gazprom, on par with a stake to be offered to a European company, in the trilateral joint venture to be created to operate its natural gas pipeline network that moves Russian gas to Europe, according to a Ukrainian source.

Ukraine was hoping the plan would encourage Russia to lower price of its natural gas sold to Ukraine to about $230/1,000 cubic meters, down from about $350/1,000 cu m currently.

But Medvedev was expected to press for at least 50% stake in such a joint venture, in which the other 50% would be owned by Ukraine, with no stakes offered to European companies, according to a Russian source.

The talks between Yanukovych and Medvedev averted a potential showdown between Ukraine and Russia later this year after both presidents had issued several warnings.

Yanukovych in early September threatened to appeal to international courts to abrogate the 10-year natural gas agreement with Russia signed in January 2009.

Ukraine also suggested it would seek to reduce Russian gas imports to 7 billion cubic meters annually within the next five years, down from 40 billion cu m to be imported in 2011.

Medvedev, in his response to the threat, warned any unilateral action by Ukraine to cancel the 2009 agreement would lead to “serious consequences” for the Ukrainian economy. (sb/ez)