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Gazprom to peg gas prices for Ukraine to world crude

MOSCOW, December 19 (RIA Novosti) - Russian energy giant Gazprom said Monday that it was moving away from fixed pricing of its natural gas exports to Ukraine toward a price regime based on world oil prices.

"Next year, we'll be using not some specific figure, but a pricing formula, one fully consistent with the formulas we employ in working with countries of eastern and western Europe," the Gazprom CEO's official spokesman, Sergei Kupriyanov, said in a radio interview. "We will rely on the same parameters related to the price of alternative fuels."

He said the price of gas for Ukraine would now be determined in accordance with the price of crude oil and oil products on global commodity markets.

Speaking of Gazprom's interest in gas distribution networks, Kupriyanov said the issue of setting up a consortium to operate Ukraine's pipeline networks had been essential to coordinating the terms of work in the gas sector in 2004 and 2005.

"However, as we can see, no headway has been made on the issue. Although the topic remains quite relevant to us," he said.

Moscow and Kiev have been locked in a dispute over gas prices and transit that has intensified in the last week.

Ukraine wants Russia to stick to a deal signed three years ago to provide gas at prices of $50 per 1,000 cu m in lieu of pipeline transit fees for Gazprom's gas supplies to Europe. Gazprom is willing to pay higher transit fees, but wants Kiev to pay the European-level of $220-230 per 1,000 cu m.