Ukraine gas pipeline upgrade 'key' to EU accession

The modernisation of Ukraine's gas pipeline is vital if the former Soviet republic is to achieve its goal of joining the European Union, President Victor Yushchenko said Saturday in an interview.

"It (the gas pipeline) is a key instrument for the Ukrainian policy of integration into the EU... We must modernise it in line with EU standards," Yushchenko was quoted as saying by the weekly Dzerkalo Tyzhnya.

His comments came ahead of an international conference of investors in Brussels on Monday.

A January dispute between Russia and Ukraine led to Russian gas supplies to Europe via Ukraine being severed for almost two weeks, triggering the EU's worst ever energy crisis.

Yushenko said cooperation with the International Monetary Fund would have to be revived if the country was to gain the foreign investment needed to carry out the modernisation.

"It will be difficult to get the financial aid for the modernisation of our gas pipelines if we do not manage to re-establish mutually acceptable relations with the IMF," he added.

The IMF is considering whether to grant a second instalment of 1.9 billion dollars from a 16.4-billion-dollar loan package to help the country cope with a severe economic crisis.

But the country risks missing out on the money over concerns about its ballooning budget deficit and political tensions between Prime Minister Yulia Tymoshenko and Yushchenko, which have paralysed decision-making in the country.