Ukrainian Prime Minister Mykola Azarov said Wednesday he expects natural-gas supply contracts from Russia to Ukraine to be revised.

"We will achieve a revision of the gas agreements," Azarov said at a cabinet meeting. Azarov and his ally, President Viktor Yanukovych, say that the price Ukraine pays Russia for gas under a January 2009 agreement is excessively high and are seeking to renegotiate the contract with Moscow .

Azarov accused the previous government of former Prime Minister Yulia Tymoshenko, who now leads the opposition, of concluding a "shackling gas agreement" with Russia that "sucks an excess $3.5 billion per year from the state compared with European prices."

The new administration in Kiev last month offered Russia a stake in a consortium to run Ukraine 's pipeline system, which transports 80% of Russian gas flows to Europe . No agreement was reached, but Russian Prime Minister Vladimir Putin said "no issue is closed to us" after meeting Azarov in Moscow March 25.

A reduction in the price of gas from Russia would be a boost to Ukraine 's economy, which is struggling to pull out of a slump that saw gross domestic product drop by 15% in 2009. The economy is powered by energy-hungry industry in the east of the country, which needs cheap gas to remain profitable.

In a meeting with Yanukovych Tuesday, Azarov said an increase in the price of gas to $330 per 1,000 cubic meters in the second quarter of the year, from $305 in the first quarter, would cripple the key chemical and metals sectors.

Ukraine is negotiating with the International Monetary Fund on the resumption of a $16.4 billion bailout program that depends on the new government holding a tight budgetary line. The gas price weighs heavily on the budget because of large state subsidies. Azarov said the high gas price made developing a state budget for 2010 "extreme work."
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