The controversy around Russian natural gas being supplied to Ukraine at knock-down prices has been closely watched by the Russian President. Thursday Vladimir Putin gathered the economy block ministers at his residence in Novo-Ogariovo to discuss the prospects for settling the current "gas price stand-off".

As has been reported, starting from the next year the European importers of Russian natural gas would be paying $255 for 1,000 cubic meters, whereas Ukraine is still getting it at a mere $50.

To sum up V. Putin's remarks made at Novo-Ogariovo, Ukraine is definitely in a position to buy Russian gas at market prices, whereas Russia cannot afford to subsidize Ukrainian economy. The total of the Russian rebates to Ukraine constitutes at present $4.6 billion.

"Talks on switching over to the market forms of payment for the Russian gas supplies to Ukraine and for the gas transit to Western Europe did not begin yesterday, nor the day before, when the snow came. We initiated that process as long ago as March of this year. In fact, our Ukrainian partners not only supported that process in a most energetic manner, but have largely been its initiators, which I think to be only right and proper", underlined V. Putin.

"At the same time, I would like to note that Ukraine itself produces about 18 billion cubic meters of gas. It fully meets household consumers' demands, meaning Ukrainian citizens who use natural gas in their houses and apartments. So it has nothing to do with Russian gas supplies. In this sense, our Ukrainian colleagues can surely set any price for that gas. It is their sovereign right", the Russian President went on to say.

"If they believe that social problems can be solved that way – which is possible from the viewpoint of the country's economy, then why not, it's up to them. But as for industrial consumers and branches of the economy, if they want to subsidize and support them, then in a normal economy such problems are solved in a transparent way, through the budgetary process, so that the public knew who, how much and why is getting money from the state. It is universal practice. As a matter of fact, it is again up to them to decide".

"We must not create difficulties for our Ukrainian colleagues, but at the same time we must be realistic. And the reality is that in spite of the significant fall in Ukraine's rate of economic growth as compared to the previous years, it is still comparable to that of Russia this year".

"Besides, Ukraine received considerable sums from privatization, as well as loans granted by Western financial institutions for power development projects. These sums amount to billions of dollars. This is quite enough to buy the required volumes of Russian gas at market prices".

"Moreover, during the first quarter of the next year our Western European consumers will be getting natural gas from Russia at $255 per 1,000 cubic meters. If you look at the present-day price of gas in Ukraine, which is $50, you'll see the difference. Accounting for a shorter transportation distance in the Ukrainian case, the difference will be slightly less, but still some $180 for 1,000 cubic meters".

"I would also like to call your attention to another thing: in addition to the funds received from international financial institutions and the availability of Ukraine's own budgetary reserves, it has one more source of revenue, which is not to be ignored and which is our direct concern. At the beginning of this year we, Russia and Ukraine, began making tax payments for natural gas and gas condensate at the country of destination. Considering the current prices for these energy carriers, the direct transfer of funds from the Russian budget into the Ukrainian one will make about $1 billion".

"I am saying "direct transfer", because there is no reciprocal flow of such commodities to Russia. Thus, it represents in fact budgetary support for our Ukrainian friends. So the possible losses of "Gazprom" due to the difference between world prices and today's prices for Ukraine will come to $3.6 billion annually, plus $1 billion from our budget, the total being $4.6 billion. This is a serious burden on Russia's economy, which would be difficult to explain. In O'Henry's words, "Bolivar can't carry double".

"To top it all, in Ukraine household consumers are getting gas at a cheaper price today than citizens of the Russian Federation in their own country. Considering that in Russia 25 million people still live below the poverty line and that we have great plans for the gasification of our country still waiting to be implemented, still only at the stage of designing, we simply have to find acceptable solutions both for our partners and for our economy", said V. Putin.