Ukraine Rejects Russia's $100 Gas Price Discount as Crisis Rumbles On

Ukraine has turned down Russia's proposal of a $100 price reduction for natural gas, Prime Minister Arseny Yatseniuk said.

He told his cabinet that Ukraine's state-controlled gas company Naftogaz was hoping to change the terms of its contract with the Russian state energy giant Gazprom.

"Russia has offered us a gas price cut of $100," Yatseniuk said in a televised statement. "Our position remains the same: we rewrite the contract and get the market price."

Moscow has proposed wiping the $100 per 1,000 cubic metres export duty for gas exports to Kiev which was introduced after it annexed the Crimea region from Ukraine.

The gas dispute is one part of the long-running political crisis between Ukraine and Russia. Relations soured when Ukraine's pro-Russian ex-president Viktor Yanukovych fled the country amid a wave of popular protests. He was replaced by an interim government seeking closer ties with Europe, prompting Russia to almost double the price it charges Ukraine for gas.

The new government in Kiev is seeking to renegotiate the terms of a 2009 contract that tied it in to purchasing a set amount of gas at $485 per 1,000 cubic metres, regardless of the amount of gas it consumes. It's the highest price paid to Gazprom by any European customer.

Russia has pushed back the deadline for Ukraine to start paying for gas in advance to Monday, postponing a threat to cut off Kiev's supply and potentially disrupt supplies to Europe.

The European Union relies on Russia for around a third of its gas needs, about half of which comes via Ukraine.

The two sides are due to resume talks over the price dispute on Wednesday.