No plans to merge Gazprom and Ukraine’s Naftogaz

Ukrainian President Viktor Yanukovych reiterated on Friday that Kiev welcomed cooperation between the state-owned energy firm Naftogaz and Russia’s gas giant Gazprom, not the merger deal proposed by Russian Prime Minister Vladimir Putin.

He said that while the two companies would participate in joint projects such as the upgrade of the Ukrainian gas transportation system, there were “no plans for a merger as such and I am convinced it will not happen.”

Putin proposed the merger, which would give Russia control over Ukraine’s gas pipelines, last April, but Ukraine, which was to become a minority shareholder in the merged firm, rejected the idea.

Russia and Ukraine are often at odds over the price Kiev has to pay for gas from Gazprom and the spats have several times ended in the suspension of Russian gas deliveries to Europe through Ukrainian territory.

Kiev has been trying to renegotiate an agreement with Gazprom that was signed in 2009 by ex-premier Yulia Tymoshenko since last spring. The deal tied the price for gas to international oil prices and as a result, Naftogaz’s bill has been steadily rising. Tymoshenko is now being tried on abuse of office charges for signing the deal.

Last August, Gazprom said a merger between it and Naftogaz may lead to lower gas prices for Ukrainians.

Yanukovych said he hoped to agree on the price for gas this month at a meeting with Russian President Dmitry Medvedev.

 He also said the state-run monopoly Naftogaz, which produces over 97 percent of Ukrainian gas, should be restructured to spin off its different businesses and reiterated government plans to sell a minority stake in Naftogaz in an initial public offering.

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