Ukrainian PM says Japanese firms may help upgrade gas system

KIEV, March 28 (RIA Novosti) - Japanese companies are willing to take part in modernizing Ukraine's aging gas supply system, the country's prime minister told journalists on her return to Kiev.

The announcement comes after Kiev and the EU signed a cooperation pledge earlier in the week aimed at encouraging investment and avoiding a repeat of January's gas dispute, which resulted in a temporary cut in Russian gas supplies.

Under the agreement, the EU endorsed Ukraine's plan to modernize its Soviet-era pipelines and underground storage facilities, and to build new gas metering stations. The EU pledged 2.5 billion euros ($3.4 billion) on the condition Kiev reform the sector to make it more open and transparent.

"Japanese companies have expressed their common willingness to participate in the modernization of Ukraine's gas transport system," Yulia Tymoshenko said, although did not elaborate on which firms could be involved.

Russia, which transits about 80% of its Europe-bound gas via Ukraine, reacted badly to the news accusing the EU of deliberately excluding it from talks.

Foreign Ministry spokesman Andrei Nesterenko told reporters earlier that gas agreements signed between Russia, Ukraine and the EU in February on a format for future cooperation have been "clearly violated."

A source in the Kremlin said that Moscow had postponed indefinitely planned Russia-Ukraine intergovernmental talks on Saturday following the announcement.

"It is not a question of one or two weeks," the source said.