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Gazprom Offers to Prepay Ukraine for Gas Transit (Update1)

By Stephen Bierman and Torrey Clark

Dec. 30 (Bloomberg) -- OAO Gazprom, Russia’s natural-gas export monopoly, offered to prepay fees for shipping gas to Europe via Ukraine to help the country pay its debt and avoid a cutoff.

The proposal is “under discussion,” Sergei Kupriyanov, a spokesman for Gazprom, told reporters in Moscow today.

State-run Gazprom, which briefly shut off supplies to Russia’s neighbor in January 2006 amid a pricing dispute, said Ukrainian energy company NAK Naftogaz Ukrainy owes about $2 billion for supplies and penalties this year. The Russian company “hopes” that talks will yield results today to avoid a Jan. 1 cutoff, Kupriyanov said.

Ukraine, which transports about 80 percent of Russia’s gas exports, has assured Gazprom that it will abide by its obligations under a long-term contract to transport gas to Europe, Kupriyanov said. Gazprom can’t guarantee those commitments will be honored, he said.

During the 2006 shutoff, some European consumers registered shortfalls that Gazprom blamed on Naftogaz. Ukraine said it took Turkmen gas from the pipeline secured under a contract with the Central Asian country.

To contact the reporters on this story: Torrey Clark at tclark8@bloomberg.netStephen Bierman in Moscow sbierman1@bloomberg.net.

Last Updated: December 30, 2008 06:56 EST

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