Ukrainians in a store acting as dead bodies in a flash mob action protesting against buying Russian goods in Kiev, Ukraine. The writing on posters reads ‘Boycott the Russian (goods), don't feed the occupants!’ Photo: PA

Ukraine warned yesterday it would take Russia to arbitration court if natural gas talks with Moscow failed to roll back price hikes that Kiev called an act of economic aggression.

Russia nearly doubled the price Ukraine pays for its gas last week, forcing Kiev, whose economy is in chaos, to enter into emergency talks with European neighbours to boost cheaper imports from the West.

Ukraine accuses Russia of using the price hikes as a tool of economic pressure after popular protests in Kiev ousted pro-Russian president Viktor Yanukovych in February, souring relations between the two former Soviet republics.

Russia seized Ukraine’s Crimea region and formally annexed it last month widening the dispute into the biggest stand-off between Russia and the West since the end of the Cold War.

“Our Russian neighbours have carried out yet another form of aggression against Ukraine – aggression through its gas supplies. This price is the highest on European territory and it is not an economic but a political price,” said Prime Minister Arseny Yatseniuk at a Cabinet meeting.

Ukraine is still in talks with Russia to cut the gas price, which Moscow raised to $485 per 1,000 cubic metres from a previously discounted price of $268.50, making it now by far the highest price paid in Europe for Russian gas.

Russia and Ukraine have already clashed in gas price hiking

The Russian gas export monopoly Gazprom says that on average it charges its European customers between $370 and $380 per 1,000 cubic metres.

Ukraine imports more than half its gas needs from Russia. “If we don’t come to an agreement (with Russia) then there is a procedure laid out in our contract, going to the arbitration court in Stockholm,” Ukrainian Energy Minister Yuri Prodan told journalists before a Cabinet meeting.

“We are not trying to break our contract but to set up a fair price like in Europe,” he said.

According to a 2009 contract, the price is calculated on the basis of several fuel product prices and Yatseniuk said there are no economic grounds to increase prices for gas.

In raising the price, Russia scrapped two discounts, simultaneously.

One was introduced in 2010 when Ukraine agreed to extend terms for Russia’s Black Sea Fleet in Crimea until 2042, and the second was agreed in December after Yanukovych scrapped a trade deal with the EU in favour of closer ties to Russia.

That decision sparked the popular protests that eventually led to his ouster.