You're reading: Kyiv says EU must join any Russia gas merger talks

The European Union should be part of any talks between Kyiv and Moscow to merge their gas groups, Ukraine's president said on Wednesday in a comment likely to upset Moscow which wants to sideline the EU from the process.

"If we decide to begin talks (about the merger) we should include the EU at a certain stage as the main consumer of gas and the main partner," President Viktor Yanukovich said in a first public reaction to Moscow’s merger proposal.

Russia’s Prime Minister Vladimir Putin proposed last week to merge Russia’s Gazprom (GAZP.MM: Quote, Profile, Research) and Ukraine’s Naftogaz to the surprise of industry experts and outcry of Ukrainian opposition.

The move could give Moscow control over Kyiv’s gas transit network, which ships a fifth of Europe’s gas consumption from Siberian fields and has been a headache for the Kremlin in past years when Kiev suspended supplies during pricing disputes.
Putin’s spokesman Dmitry Peskov told Reuters last week the deal would most likely take the form of an equity swap between the two firms, with Ukraine possibly exchanging its 100 percent holding in Naftogaz for a corresponding stake in Gazprom.

Some industry experts have said Putin is taking advantage of the Greek crisis, which is dominating the EU’s attention and efforts, to quietly take control of Ukrainian gas pipelines which are key to Europe’s energy security.

Relations between Moscow and Kiev have rapidly improved after the presidential election in Ukraine in February which saw pro-Western Ukrainian leadership losing out to Yanukovich, seen as more friendly toward Moscow.

Last month, the two countries reached accords on gas pricing and a lease extension for a key Russian naval base in Ukraine.

But Yanukovich has nevertheless insisted on involving both Russia and the EU in upgrades of Ukraine’s ageing pipeline system as he called Brussels a partner of an equal if not bigger importance than Russia.

On Wednesday, Yanukovich also reiterated that Ukraine, which is heavily dependant on gas transit revenues, wanted to nearly double transit of Russian and central Asian gas via its territory.
"It is based on those factors and on a forecast of an outcome of those talks that Ukraine will have to take a decision on how to respond to the initiative of Vladimir Putin," he said.