Russia embroiled in gas price dispute with Ukraine[de] 

Ahead of the scheduled January renewal date of the two countries' natural gas export contracts, Russian gas monopoly Gazprom decided to sharply increase prices for Ukraine in 2006. To date, Kiev has paid 42 euros per 1,000 cubic metres of gas, but under Gazprom's new offer the price would jump to as high as 185-193 euros. Gazprom says that the threefold increase is justified and overdue. The new scheme would enable Russia to charge a floating price for natural gas based on market prices for a basket of oil products.

Up until now, Ukraine has received gas from Russia at a heavily discounted price, which also factored in fees levied for Russia's use of Ukrainian pipelines. Moscow now wants to switch over to market rates. 

As an alternative, Gazprom has offered to continue with cheap gas supplies in exchange for an undisclosed stake in Ukraine's gas pipelines. Kiev has turned down the latter offer.

The EU fears that the dispute between Moscow and Kiev may affect European gas supplies. Some 80% of Gazprom's Europe-bound exports pass through pipelines in Ukraine. Ukrainian President Viktor Yushchenko has said that the row would have no effect on European gas supplies. He has also called for calm in the conflict and said that the issue should not be "politicised".

Simultaneously, Gazprom is renegotiating export contracts with a number of other former Soviet states.