KIEV, Oct. 5 - Ukraine must quickly introduce energy saving technologies as the country will face an extremely high increase in natural gas prices starting in 2008, Prime Minister Viktor Yanukovych said Thursday.

Ukraine will probably pay between $200 and $210 per 1,000 cubic meters of gas in 2008, up from $130/1,000 cu m forecast for 2007 and $95/1,000 cu m in 2006, Yanukovych said.

???Energy conservation will be the top priority for the government next year,??? Yanukovych told local officials in the Mykolayiv region, according to a statement released by the Cabinet of Ministers.

Ukraine has been hoping to keep the gas price at $95/1,000 cu m through the end of 2010 following an agreement between Gazprom and Naftogaz Ukrayiny, the national oil and gas company, signed Jan. 4.

Kiev sought below-market gas price in exchange for charging Russia below-market tariff for moving its gas to the European Union.

Ukraine currently charges Russia $1.60 for moving 1,000 cu m of Russian gas for a distance of 100 km, which is about 40% less than what Central European countries charge Russia for similar services. This opens the way for Ukraine to seek a greater tariff for moving Russian gas, analysts said.

Yanukovych said the government will work hard to encourage major industrial consumers, such as steel companies, mineral fertilizer producers and power generators, to reduce consumption of expensive natural gas.

For example, the government said most of the fossil-burning power plants will switch to burning domestically produced coal from natural gas currently used.

Ukraine has been consuming an overall of 76 billion cu m of gas annually, while domestic production was at more than 20 billion, forcing the country to import up to 56 billion cu m of gas elsewhere, mostly from Russia and Turkmenistan.

Russia recently agreed to charge Ukraine $95/1,000 cu m for gas supplies from early October through the end of December, despite earlier suggestions that the price would increase to $135/1,000 cu m.

Analysts said that deal probably included a secret agreement allowing RosUkrEnergo, a gas trader controlled by Gazprom, to recoup the losses through extra gas supplies for exports via Ukraine.

Ukraine is currently holding talks with Russia over gas prices to be charged in 2007, but the Ukrainian government believes the price will be at between $130 and $135 per 1,000 cu m.

???I hope the price will be $130, but I believe this will be the last year [of cheap gas],??? Yanukovych said.

Russia will probably charge $180/1,000 cu m for gas supplies to Poland, $200/1,000 cu m for gas supplies to Latvia, Estonia and Lithuania, and about $300/1,000 cu m for supplies to Romania, Yanukovych added. (tl/ez)