Yushchenko asks Russia to alter gas contract

Ukrainian President Viktor Yushchenko has asked Russia to amend the existing natural gas supply contract as soon as possible, to avoid problems with gas transit to Europe, according to RIA Novosti.

In an open letter to President Dmitry Medvedev posted on his official website on Thursday, Yushchenko criticized the gas contract signed between Ukraine's Naftogaz and Russian energy giant Gazprom at the start of 2009.

"For Ukraine, honoring its commitments is too burdernsome due to the non-market principles that the contracts are built on," the Ukrainian leader said.

Yushchenko said the price of Russian natural gas for Ukraine has almost trebled over the past three years, and now exceeds the average price for European Union consumers. He said the price of gas transit via Ukraine was three times lower than that charged by EU gas transiting countries.

He also complained that the gas contract envisages fining Kiev for failure to honor commitments, while no potential sanctions could be imposed on Russia in a similar scenario.

Yushchenko also blamed the contract for Naftogaz' budget shortfall of over $4 billion this year.

"Unless the contracts remain unchanged, the Ukrainian state-run company will not be able to prepare for the winter season and therefore potential threats will arise concerning the security of gas supplies to Ukraine and its transit to other European countries," he said in the letter.

He proposed establishing a bilateral working group to consider the proposed amendments, which include symmetrical responsibility for risks and fines for Russia and Ukraine, an improved transit price formula, and a commitment not to fine Ukraine for under-importing gas in 2009.

Russia and the European Union signed on Monday a memorandum on an early warning mechanism to protect the EU from potential energy supply cuts in case of a gas dispute between Russia and Ukraine at the start of the year.

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