As Gazprom seeks to wean former Soviet states from subsidized energy, the state-owned Russian company is walking a delicate line between reaping the benefits of world market prices and pushing its customers toward diversifying their energy sources so as to reduce their dependence on Russia.

With the stakes high for Gazprom 70 percent of its revenues are earned from the third of its gas sales that go to Europe some countries are beginning to seek alternative sources of energy or start long overdue economic reforms aimed at saving energy and generating renewable energy resources.

Ukraine is one of those countries seeking ways to reduce its dependence on Russia. Locked in a bitter dispute with Gazprom over its plans to raise the price of gas from $50 per 1,000 cubic meters to more than $220, Ukraine has publicly suggested that the dispute could precipitate an overhaul of its energy sector.

Unable to resolve the dispute so far, Gazprom said Monday that it was prepared to go to the Arbitration Institute of the Stockholm Chamber of Commerce, one of the world's leading arbitration institutions. "If need be, we will go to this court," a Gazprom spokesman said.

Oleg Rybachuk, chief of staff for Ukraine's president, Viktor Yushchenko, said over the weekend that the Russian push for higher prices was giving Ukraine the incentive to improve its economy.

"However paradoxical it may sound," Rybachuk said, "the situation is positive for Ukraine and gives the country a chance, for example, to strengthen its energy security and introduce energy-saving technologies." He acknowledged that such reforms and energy-saving measures could not be introduced immediately, which is why he repeated Ukraine's position that it was willing to pay world market prices for its Russian gas, provided the increase was phased in over a period of two or three years.

But Gazprom kept to its hard line on Monday, saying Ukraine had itself been avoiding the gradual approach for years.

"Ukraine has missed its chance by not phasing in the prices when it said it would," a Gazprom spokesman said. "We still intend to immediately introduce the price increases by Jan. 1."

Russia and Ukraine have little room to maneuver. Unlike many of the former Soviet republics that will also pay higher prices for gas, the two countries are highly interdependent. Russia relies on Ukraine's transit gas pipeline to transship Russian gas to Europe, which imports a third of its energy from Russia. And Ukraine, despite talk of diversification, imports 75 percent of its gas from Russia.

There is a great deal of prestige and money riding on this dispute. Russia is set to earn an extra $3.8 billion a year by increasing its energy prices to Ukraine, according to the Center for Eastern Studies in Warsaw.

Gazprom's gains could be dented if Ukraine raises transit charges for Russian gas supplies to Europe, as it has threatened to do. Ukraine charges $1.09 per 1,000 cubic meters per 100 kilometers. According to Naftogaz, Ukraine's state-owned operator of the transit network, it annually sends 170 billion cubic meters to Western and Eastern Europe.

Claudia Kemfert, energy expert at the German Institute for Economic Research, said it was understandable that Russia wanted Ukraine to pay world market prices for its gas. But she questioned Gazprom's tactics.

"If Gazprom cuts off its gas supplies to Ukraine, it would be very damaging for Russia," Kemfert said.

"It would show that Russia is using Gazprom not just as its powerful economic tool but also as a powerful political tool as well."

But Alexander Medvedev, deputy chairman of Gazprom, said in a recent interview that the company was simply exercising market conditions by demanding that Ukraine pay higher gas prices.

"The European Union this month granted Ukraine market economy status," he said. "That means it has to pay market prices for its energy."

Yet Gazprom has announced that starting on Jan. 1 it will raise gas prices across the former Soviet empire, from the Baltic States in the north to Moldova and Georgia in the south. In most cases, the increases do not match world market prices; nor are they all the same.

* For example, Ukraine is being asked to accept the greatest price increase, from $50 per 1,000 cubic meters to more than $220 per 1,000 cubic meters

* Moldova, whose government has shifted its foreign policy away from a pro-Russian stance to one seeking closer ties with the EU and NATO, will have its gas prices increased from $70 to $150-$160

* The Baltic states, which joined the European Union in May 2004, will next month pay $120 instead of $80

* Armenia, which is trying to reduce its dependence on Russian energy by building a gas pipeline with Iran that should be completed in 2006, will pay $110 for its Russian gas instead of $56

* Georgia, which has blocked attempts by Russia to buy a stake in its gas pipeline, will pay $110, an increase of 70 percent.

* The only country that will face no immediate price increase will be Belarus, Russia's small western neighbor, which will continue to pay $47

When Medvedev was asked why, if Gazprom believed in applying market rules for countries that bought its gas, Ukraine was being charged the most, other countries were being charged less and Belarus was exempt, he replied: "It's because Gazprom owns the transit pipeline across Belarus."

Gazprom, however, holds only a 32 percent stake in the pipeline, and President Alexander Lukashenko of Belarus has repeatedly refused to sell Russia a majority stake in that pipeline, which also ships gas to European markets.

Katarzyna Pelczynska-Nalecz, energy analyst at the Center for Eastern Studies in Warsaw, said the aim of the gas increases was to reduce the difference between gas prices in Russia's former empire and the EU.

However, she said, "the economically unclear mechanism for establishing the different prices suggests that while taking measures to increase the profitability of the gas it supplies, Russia wants to continue using gas prices as a tool of political pressure."