MOSCOW: Ukraine and Russia resumed tense talks yesterday amid Russian threats to cut off natural gas exports to its energy-dependent neighbour within 72 hours unless Kiev agrees to a four-fold rise in prices.

The dispute has brought to boiling point tensions that have strained relations between Moscow and its former republic since reformist President Viktor Yushchenko came to power in Ukraine after last year's Orange Revolution, promising to move his nation of 48 million toward integration with the West.

Russia's state-controlled gas monopoly Gazprom has threatened to turn the taps off at 10 am (0700 GMT) on Sunday if Ukraine refuses to sign a new contract to buy the gas at US$220-230 per 1,000 cubic metres - more than four times the current tariff of US$50.

Ukrainian Prime Minister Yuriy Yekhanurov on Wednesday denounced the Russian demand as unacceptable. Ukraine relies on Russia for nearly a third of its gas needs.

Ukrainian Energy Minister Ivan Plachkov flew into Moscow on Wednesday for talks with his Russian counterpart Viktor Khristenko but the two officials left the negotiations late in the evening without a deal.

Officials from OAO Gazprom and the Ukrainian state energy company Naftogaz met on Wednesday morning and the two ministers were due to resume talks later in the day.

Plachkov late Wednesday expressed hope for a negotiated outcome. "There is no way to do without movement and compromises," he said in footage shown on NTV television.

Gazprom argues that it has every right to demand the increase as a justifiable move to scrap energy subsidies enjoyed by former Soviet nations and move the price it charges Ukraine into line with world levels.

Ukraine, which fears a sharp rise in energy costs could cripple its energy-intensive heavy industry and impede efforts to boost its economy, has asked for the increases to be phased in over five years instead of all at once.

Yekhanurov warned on Tuesday that Ukraine could divert some of the Russian gas supplies going to Europe, insisting it was Kiev's right to take 15 per cent of shipments passing through its territory to European markets as transit fees.

Gazprom, which earns billions of dollars a year from lucrative exports to Western Europe half of the European Union's gas imports come from Russia said such action would amount to theft.

Ukraine has pointed out that other ex-Soviet republics such as Georgia and Armenia have had their gas tariffs raised far less to just US$110 per 1,000 cubic metres.

Maxim Yusin, foreign editor of leading Russian daily Izvestia, said that Ukraine could not expect to keep preferential gas tariffs while behaving as an "openly anti-Russian force."

Source: China Daily