VIENNA, June 8 - Ukraine will move to diversify its natural gas supplies to reduce dependence on Russian gas imports, Prime Minister Mykola Azarov said Wednesday, a day after he had failed to persuade Moscow to cut prices.
Azarov tried to persuade Russian counterpart Vladimir Putin to cut prices, but the Russian leader said after the talks Russia and Ukraine would stick to existing gas supply and transit agreements.
"Ukraine depends 100% on supplies of Russian energy resources, and we sometimes face a situation when we get prices that are in our view not optimum for us," Azarov told a World Economic Forum conference in Vienna, according to a report released by the government.
"That is why we are making maximum efforts to organize supplies of energy resource from other countries," he added.
The main thrust of Ukraine's diversification strategy is to build a liquefied natural gas terminal on the Black Sea, a project that President Viktor Yanukovych had described as the top priority for the next five years.
Azarov said that Ukraine would later this year begin building the LNG terminal, which will have capacity of 10 billion cubic meters of gas a year.
Ukraine is in talks with Azerbaijan and Central Asia as potential alternative sources of gas for Ukraine, he said.
Mykhaylo Chechetov, a senior lawmaker from Yanukovych's Regions Party, said cutting gas prices was extremely important for Ukraine.
"The gas loop is strangling us," he told Radio Liberty on Tuesday. "The issue No. 1 - the issue of life and death is the issue of gas prices."
Putin agreed to create a joint team that would look into the issue again, but there was little optimism that agreement will be reached.
"From the point of view of Russia, conditions of cooperation in the gas sector are very good," Azarov said, adding that the agreement had several problems that needed to be discussed and mutually acceptable changes made.
Ukraine wants to secure lower natural gas prices now because growing prices of crude oil may push gas price to $500 per 1,000 cu m that will make the operations of Ukrainian fertilizer producers unprofitable.
Ukraine is buying Russian gas at about $297 per 1,000 cu m in the second quarter, compared with $264/1,000 cu m in the first quarter, according to Naftogaz Ukrayiny, the national energy company. (sb/ez)
