Medvedev said Russia would sell gas to Ukraine at European prices, which are not fixed but are calculated based on various parameters. Medvedev said Gazprom would ask between $217 and $230 per 1,000 cubic meters for its natural gas supplied to Ukraine.

Russia currently sells gas to Ukraine at $50 per 1,000 cubic meters. The agreement for 2006 is being discussed. Ukraine insisted that Russia should raise the gas price gradually, while Russia wanted to sell its gas to Ukraine at $160 per 1,000 cubic meters from January 1, 2006. But the negotiations stalled, putting Russia’s gas sales to Europe under threat.

Earlier on Wednesday, Alexei Kudrin, the Finance Minister of Russia, expressed confidence that the Ukrainian economy was capable of ensuring payment for Russian gas at market level prices. This would boost Russia’s budget revenues because Gazprom would pay higher taxes, he told reporters. “The time when Russia subsidized Ukraine is over,” Kudrin stressed.