KIEV, Jan. 15 – Natural gas price talks between Russia and Ukraine collapsed last month after Moscow suddenly demanded a controlling stake in Ukrainian gas pipelines, a newspaper reported Saturday, citing a source.

The sudden reversal came after the parties had preliminarily negotiated a deal in which Russia and Ukraine would control 40% each in the gas pipelines, while the European Union would control 20%.

Russian Prime Minister Vladimir Putin “refused cutting gas prices without settling the issues of the gas transportation system and domestic market,” Dzerkalo Tyzhnia reported, citing the source. “He rejected the agreed [share distribution] scheme, and demanded the controlling stake.”

The talks collapsed in December after which Gazprom’s CEO Alexei Miller had declared that “there will be no New Year presents” for Ukraine before the end of the year.

Ukraine has been seeking to lower gas prices to between $230 and $250 per 1,000 cubic meters, down from $401/1,000 cu m in the fourth quarter of 2011.

The lower price was supposed to help Ukraine save $6 billion annually beginning in 2012.

Energy Minister Yuriy Boyko said Friday Ukraine will not sell its gas pipeline network to Russia in exchange for supplies of cheaper gas.

Ukraine, which depends heavily on Russian gas supplies, has sought for over a year to renegotiate a 2009 deal with Moscow, which it says sets an exorbitant price for the fuel. But talks have failed to produce any results so far.

"The issue of (a pipeline network) sale has never been on the agenda. We dismissed it immediately," Boyko told reporters. "If we find a model that satisfies both sides, we will make a deal. Otherwise we will work under the existing contract."

Boyko appeared to be setting out the Ukrainian position ahead of a fresh round of talks, which are due to begin on Jan. 17 in Moscow.

Ukraine under the present 10-year agreement is set to pay $416 per thousand cubic meters in the first quarter of this year, but is hoping to get Russia to agree to a price of no more than $250.

Previous disputes between the two briefly disrupted the shipments of Russian gas to Europe in 2006 and 2009, prompting a search for alternative suppliers and transit routes. (tl/ez)