Moscow (Platts)--22May2009

Russian President Dmitry Medvedev called for the European Union to take
part in a syndicated loan to help Ukraine pay for natural gas supplies, as he
said the country was having solvency problems.

Ukraine is to buy 19.5 billion cubic meters--"a significant volume of
gas"--worth over $4 billion to pump into its storage tanks this year,
Medvedev said in televised comments.

"If Ukraine has money, that's perfect. But we have doubts about Ukraine's
ability to pay," Medvedev told reporters following the Russia-EU summit in the
Russian Far Eastern city of Khabarovsk.

"We are ready to help Ukraine. But we would like the EU to take a
significant part in this work," he said.

"In other words, if we are speaking about loans, let's help Ukraine to
[receive a] syndicated [loan]," he said adding that it was not only for Russia
to resolve the issue of Ukraine's solvency.

Ukraine has been struggling to pay Russia for gas supplies as the
country's economy has been hit hard by the economic crisis.

Russia is currently discussing a possible loan of $5 billion to Ukraine
to help the country pay for gas in order to keep supplies uninterrupted as its
national oil and gas company Naftogaz Ukrayiny is on the verge of bankruptcy.

In January, Russian gas flow to Ukraine and further transit to Europe was
cut for about two weeks due to a dispute regarding gas contract terms.

NO PROMISES OF STABLE GAS TRANSIT

Russia, meanwhile, "has made no promises" regarding stable gas transit
to Europe via Ukraine "and will not do so," Medvedev said when asked if Russia
could guarantee that no halts in gas supplies will take place in the future.

"Why? There are no any problems on our side. We are all right, with gas
and with fulfilling our responsibilities. Those who are to pay for gas should
give such assurances."

European Commission President Jose Manuel Barroso said at the same press
conference in Khabarovsk that he hoped there would be no new disruptions in
supplies, saying the January cut had "a devastating effect" for Europe.

He said it was up for Russia and Ukraine to do their best to avoid other
possible crises next year, hinting it was not an issue for Europe to address.

"Both Russia and Ukraine should do their best so that European consumers,
who are not accountable for such problems, do not suffer from consequences of
such problems," Barroso said at the press conference broadcast by Russian
state Vesti TV.

Since the start of 2009, Russian gas giant Gazprom has provided Naftogaz
some $2.15 billion against future payment of transit fees for pumping of
Russian gas via Ukrainian pipelines, which equals transit payments for entire
2009.

Some $1.7 billion was provided in January, followed by $450 million in
late April which Naftogaz used to pay for 2.3 Bcm purchased in April. Naftogaz
paid less than $200 million in cash for the April supplies.

Naftogaz is to make payments for monthly supplies by the seventh of the
following month, according to agreements reached in January to resolve the gas
crisis.

The lack of money might turn the financial issue into a technological
problem, Gazprom's deputy CEO Alexander Medvedev said in an interview with
Vesti TV Friday.

Last January, the lack of so-called technological gas in Ukraine--which
keeps the pipeline network in operation--was among the issues that led to a
halt in gas supplies to Europe via the country.
--Anna Shiryaevskaya, anna_shiryaevskaya@platts.com
--Nadia Rodova, nadia_rodova@platts.com