S. Stream cheaper than upgrades for Kiev

MOSCOW, Jan. 3 (UPI) -- It's likely to cost more to upgrade the natural gas transmission system in Ukraine than it would to build a new pipeline around the country, Gazprom said.

Gazprom is looking for new ways to deliver natural gas to European consumers while avoiding geopolitically sensitive territory in Ukraine. Of the 20 percent of the Russian gas headed to Europe, 80 percent of that runs through Soviet-era pipelines in Ukraine.

Alexei Miller, chairman of the board at Russian natural gas company Gazprom, told the Kremlin it would likely cost more to upgrade the Ukrainian gas transmission system than it would be to build the South Stream pipeline around Ukraine.

Russian Prime Minister Vladimir Putin said it was important to keep the lines of communication open with Kiev "on the assumption that Ukraine has always been, it is and, I hope, will remain a strategic partner of ours."

Ukrainian officials are pressing Gazprom for a better deal for natural gas. The company's former prime minister is serving a seven-year prison sentence after being convicted of corruption in relation to Ukraine's current gas deal with Gazprom.

South Stream would go around Ukraine to Europe through Turkish territory. Putin said it was important that Gazprom speed up the execution of the South Stream pipeline.