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Moscow delays talks with Kiev over Ukraine-EU pipeline deal

MOSCOW, March 24 (RIA Novosti) - Russia is putting off government consultations with Ukraine, which were due next week, until its natural gas pipeline declaration with the EU is clarified, President Dmitry Medvedev said on Tuesday.

Ukraine and the European Union signed a cooperation declaration on Monday to modernize the ex-Soviet state's gas pipeline network. Russia, which transits about 80% of its Europe-bound gas via Ukraine, said it was excluded from the talks in Brussels.

"The consultations will take place after Russia has received answers to its questions," Medvedev told a Security Council meeting. "This declaration raises questions."

Speaking at the meeting, Prime Minister Vladimir Putin said: "For our inter-government consultations to be effective, we need to clarify the situation."

On Monday, Putin threatened to review ties with the EU if it continued to ignore Russia's interests.

The EU endorsed Ukraine's plan to modernize its Soviet-era pipelines and underground storages and build new gas metering stations, for which Europe pledged 2.5 billion euros ($3.4 billion) and to encourage more investment on the condition Kiev reform the sector to make it more open and transparent.

Ukraine also asked the EU to help build two more pipelines to increase the network's capacity by about 60 billion cubic meters to 200 billion cu m, a project it earlier estimated at $5.5 billion. Kiev says it is cheaper than building long-distance gas pipelines, such as Nabucco promoted by Europe and the Nord Stream and South Stream projects Russia has been pushing for.

President Viktor Yushchenko said on Monday Ukraine would soon join the treaty on the common European energy system, raising fears in Moscow that Ukraine would be legally closer to the EU in the energy sphere.

Some EU countries experienced disruptions in gas supplies in January as Russia briefly cut off shipments via Ukraine amid a debt and pricing row with its neighbor. The crisis fueled EU concerns on reliance on Russian energy.

The Ukrainian prime minister said on Tuesday that Russia was welcome to invest in Ukraine's pipelines and modernize them.

"Russia can invest in and modernize the gas pipeline system," Yulia Tymoshenko told a news conference, adding that Moscow might not like some aspects of the cooperation agreement with EU, but the document did not run counter to Russia's interests.

Tymoshenko said Monday's deal had ensured Ukraine's energy interests for decades.