KIEV, March 12 – Prime Minister Yulia Tymoshenko said Wednesday Gazprom and Naftogaz Ukrayiny agreed to immediately eliminate UkrGaz-Energo as an intermediary in gas trades and confirmed the natural gas price at $179.5 per 1,000 cubic meters through the end of the year.

Gazprom on Wednesday declined to comment on Tymoshenko's remarks.

"At this stage we can only say that the talks continue," Sergei Kupriyanov, a spokesman for Gazprom, said Wednesday. "We will talk about details of the agreement tomorrow."

The announcement, made on the government’s Website late Wednesday, dispels concerns caused by media reports that Ukraine may be forced to buy at least some Russian gas at $321/1,000 cu m.

Tymoshenko also said Gazprom and Naftogaz had agreed in principle not to set up any new natural gas joint ventures to handle future supplies of gas from Russia to Ukraine.

“A mutually agreed decision has been signed by Gazprom and Naftogaz to remove UkrGaz-Energo from the Ukrainian gas market,” Tymoshenko said in the statement.

“Another decision that has been approved by the parties today is that the gas price for Ukraine will not exceed $179.5/1,000 cu m through the end of 2008,” Tymoshenko said.

A Naftogaz team, led by Oleh Dubyna, the head of the company, has been holding talks with Gazprom in Moscow following a spat between the two companies last week. Gazprom cut in half, but later resumed, gas supplies to Ukraine, citing Naftogaz’s alleged failure to pay $600 million in debts.

The issues of gas prices and joint ventures are sensitive and have been recently causing tensions in Ukrainian politics, including a public clash between President Viktor Yushchenko and Tymoshenko.

Tymoshenko last week alleged that Yushchenko supported a higher gas price for Russian gas purchases, at $312/1,000 cu m, and also backed the creation of two joint ventures that she had alleged may promote corruption.

Yushchenko responded strongly and accused Tymoshenko of lying to the people. He went for an unprecedented move to declassify his secret instructions for government ahead of the talks in Moscow, showing that he had in fact defended the price of $179.5/1,000 cu m and that the government may create the joint ventures “if necessary.”

Tymoshenko’s announcement on Wednesday is also significant as it comes after Kommersant daily newspaper has reported Tuesday that Naftogaz has last week agreed to buy some gas from Russia at $321/1,000 cu m.

Kommersant said it had obtained a photocopy of the paper signed in Moscow by Ihor Didenko, the deputy head of Naftogaz. Didenko, who refused to comment, is a member of the team currently holding the talks with Gazprom. (sb/ez)