Ukrainian Minister Says New Energy Deal May Be Coming

KIEV -- The governments of Ukraine and Russia could sign an energy agreement to avoid the kind of gas disputes that have alarmed Europe over the past two years, a senior Ukrainian official said Friday.

"It's possible that when this meeting takes place, the signing of an intergovernmental agreement will be on the agenda," First Deputy Prime Minister Oleksandr Turchinov told journalists.

"This is the very sort of document that will guarantee good relations between our countries in terms of energy, free from unforeseen problems and tensions."

Pricing and debt disputes between the two countries have alarmed Europe after a standoff in 2006 led to Russia briefly cutting supplies to Ukraine, which transits a large amount of gas for European use.

Europe gets one-quarter of its gas from Russia -- most via Ukraine. The last such dispute was resolved Tuesday, just before a deadline by Gazprom to reduce supplies over payment arrears by Naftogaz Ukrainy of more than a billion dollars.

Prime Minister Yulia Tymoshenko, who has criticized gas intermediaries, is due to visit Moscow this week.

Under this week's deal, the two sides agreed on debt repayment, settled gas prices for 2008 and said intermediary RosUkrEnergo, created after the 2006 spat and frequently criticized by Ukraine, would eventually be eliminated.

Gazprom and Naftogaz agreed they would create a 50-50 joint venture to replace the intermediaries. Ukraine says the go-betweens use corrupt practices, leading to higher prices and hurting Naftogaz's financial situation.

Turchinov said the venture should not merely provide a new face for old practices.

He also said Ukraine would begin paying off its debt. "I do not see any problems with the repayment," said Turchinov. "More important is to pay for current supplies and to not generate any debt."

Reuters, Bloomberg