Easy solution?

Russia should let Europe do the overhaul deal and transport fuel across Ukraine, so political tensions between Russia and Ukraine do not lead to regular supply problems, said Walter Boltz, head of Austrian regulator E-Control and vice chairman of the European Regulators' Group for Electricity and Gas.

"It has to be a European solution, because the current model, where Russia is basically responsible commercially for the transit, is overlaid by all this political background ... which makes the relationship between Ukraine and Russia very difficult, very delicate and likely to erupt every other month," Boltz said, according to the Moscow Times.

Russia now supplies a quarter of the EU's gas, 80 percent of which is pumped across Ukraine.

Others believed Russia should be included into the project.

During a meeting with Russian Deputy Prime Minister Igor Sechinhere on Tuesday, Paolo Scaroni, CEO of the Italian state-owned energy company Eni, said Russia and its largest consumers must be involved in any agreement to modernize Ukraine's gas pipelines.

Any plan without involving the supplier is a waste of time and money, he told the Moscow Times.

Some observers have also warned that a new gas row could be on the horizon as Ukraine, currently struggling with the economic downturn and political impasse, finds it hard to pay the higher gas prices charged by Russia.

Strategic gas game

Beyond the loaves and fishes involved in the spat, some strategies have come up to the stage from behind the curtains.

Some analysts say the reason why Russia is angry over the declaration is that it sees itself shoved off a project that serves its crucial interests.

Russia's reaction has revealed its sensitiveness to the question of who wields leverage over Ukraine's gas pipeline network, the Moscow Times reported.

As some experts put it, a large strategic gas game is going on, and Russia has felt potentially threatened by the EU-Ukraine deal.

Russian political analyst Fyodor Lukyanov pointed out that the European Commission tried to turn Ukraine into an energy testing ground through the gas dispute.

Brussels apparently wants to introduce certain energy market principles to Ukraine that do not work well in the European markets, such as competition-based access to pipelines and storage tanks and transport operators independent of producers, Lukyanov was quoted as saying by the Russian daily Vremya Novostei on Wednesday.

(Xinhua News Agency March 26, 2009)