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Yanukovych traveling to Moscow for talks
Journal Staff Report

KIEV, Dec. 17 - President Viktor Yanukovych will travel to Moscow on Tuesday for talks over energy and trade issues with his Russian counterpart Vladimir Putin, the Yanukovych administration reported Monday.

The trip comes as the two countries are close to signing a major natural gas supply agreement that would lower Russian natural gas prices, people familiar with the issue said.

Speculation over the possible trip has been circulating for most of the past week, but the Yanukovych administration has been refusing to confirm the reports.

Ukraine has been trying for 2.5 years to negotiate lower gas prices by changing a formula, which is currently too heavily weighted on crude oil.

But Russia has refused to cut the prices without major political and economic concession from Ukraine.

Putin said earlier that Ukraine could qualify for lower gas prices only if it sells majority stake in its massive gas pipeline network to Gazprom or agrees to join the Customs Union, a Moscow-led trade bloc that also includes Belarus and Kazakhstan.

Yanukovych earlier rejected both options. He said Ukraine could agree to a 50-50 partnership with Gazprom to operate Ukraine’s gas pipelines, which carry a bulk of Russian gas exports to Europe.

He also said Ukraine was ready to cooperate with the Customs Union without joining the bloc, which he called cooperation within 3+1 formula.

During the talks with Putin, Yanukovych “plans to discuss a range of current issues of the Ukrainian-Russian cooperation, primarily in the energy and trade spheres,” the Yanukovych press service reported.

“Attention will also be paid to the development of a mutually acceptable way for interaction between Ukraine and the Customs Union of Russia, Belarus and Kazakhstan,” the press service reported.

Mikhail Zurabov, the Russian ambassador to Ukraine, last week commenting on the speculations over the trip, said the trip to Moscow will go ahead only if the parties have reached a principle agreement on important issues. He declined to elaborate further.

Ukraine has been seeking for 2.5 years of negotiations to persuade Russia to cut gas prices to $250 per 1,000 cubic meters, down from $432/1,000 cu m it pays currently.

After the negotiations failed, Ukraine announced it will cut imports of Russian gas dramatically and will instead seek imports from alternative sources, such as Germany and from Qatar.

Ukraine plans to reduce imports of Russian natural gas to 18 billion cubic meters in 2013 from 26 billion cu m in 2012 and 40 billion cu m in 2011, according to Energy and Coal Industry Minister Yuriy Boyko.

In the case of Ukraine joining the Customs Union, Ukraine would be able to get gas at $160/1,000 cu m, helping the government to save billions of dollars in subsidies it currently pays to the national energy company Naftogaz Ukrayiny.

However, any plans to join the Customs Union would derail Ukraine’s signing of political association and free trade agreement with the European Union, lawmakers said.

“We expect extremely tough confrontation concerning any changes in geopolitical course of our state,” Yuriy Mykhalchyshyn, a senior member of the national Svoboda party.

He said that the opposition groups will block the work of Parliament, but will also call on the people to take to streets to prevent the foreign policy change.

“We are ready for massive mobilization and ready to call on the people for mass disobedience actions,” Mykhalchyshyn said. (tl/ez)




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