Talks between the prime ministers of Russia and Ukraine failed on Monday to bring the two neighbors closer to a deal on gas supplies amid an intensifying row that has strained relations between the two former Soviet republics.

The meeting is the latest of bilateral efforts to move closer as talks over gas supplies to and transit through Ukraine are getting increasingly tense.

"No agreement has been reached" at the meeting between Russian Prime Minister Mikhail Fradkov and his Ukrainian counterpart Yuriy Yekhanurov in Moscow, an official in the Russian delegation said, quoted by the RIA Novosti news agency.

The official said Ukraine had a better understanding of the need to switch to market prices for natural gas transit and supplies.

Russia is a key gas supplier to Ukraine and most of its gas exports to Europe pass through Ukrainian territory.

Ukraine is currently buying Russian gas at a discounted price of 50 US dollars per 1,000 cubic meters, but Russia has demanded an end to the preferential prices and offered cash payments for gas transit.

"Specific prices were not discussed. It is a matter of economic entities. Each of them has their own method of price formation and these methods will be discussed," the official said, referring to Russian gas titan Gazprom and Ukrainian national gas company Nafotgaz Ukrainy.

Negotiations will continue between Gazprom and Naftogaz Ukrainy, he added.

Russia and Ukraine have been negotiating intensively for much of this year to narrow differences on gas prices but progress has been anything but quick. Russia has threatened to cut gas supplies to Ukraine if the two countries fail to work out a deal by Jan. 1, 2006.

In a telephone conversation last week, Russian President Vladimir Putin and his Ukrainian counterpart Viktor Yushchenko agreed not to politicize the gas row between the two neighbors.

Source: Xinhua