President says Ukraine may lease its gas transit pipeline in an apparent offer to Russia

KIEV, Ukraine – Ukrainian President Viktor Yanukovych signalled Friday that his country may lease its natural gas transit system to countries including Russia, in a move that is seen as reaching out to Moscow rather than the West.

Speaking in a televised question-and-answer session, Yanukovych said that renting out the pipeline which carries Russian gas to Europe would provide funds to maintain the sprawling gas transit and storage system and ensure that Ukraine receives proceeds for pumping the gas.

“If the gas transit system brings money, Ukraine will have an opportunity to modernize this system and maintain it in a safe condition,” Yanukovych said.

Disputes between Kyiv and Moscow on gas prices and transit fees have caused disruptions in supplies several times in the past decade, leaving millions of Europeans with no heating in the dead of winter.

Ukraine, whose economy is in recession amid falling global demand for its main export, steel, has been lobbying Russia for a discount for its natural gas and Moscow has indicated that it may agree to a lower price in exchange for acquiring control over Ukrainian gas pipelines. However, relinquishing some or all control over Ukraine’s gas transit system will likely encounter fierce criticism from pro-Western opposition parties which see the pipelines as a symbol of Ukraine’s independence.

Yanukovych also pledged not to raise household gas prices – a highly unpopular move which is a key condition to unlocking International Monetary Fund aid. The statement indicated that Kyiv is betting on stronger ties with Russia rather than fulfilling IMF austerity demands.