The European Union signed an agreement with Ukraine in late March on modernizing the country's Soviet-era pipelines, triggering an angry reaction from Russia, which exports most of its Europe-bound gas via Ukraine. Moscow said the deal estimated at $3 billion failed to take its interests into account.
"This is a completely different project. The Ukrainian proposal is looking at the possibility of building a new route of 60 billion cubic meters. The cost is $5 billion - $6 billion," said Bohdan Sokolovskiy.
The European Commission has assessed investment in Ukraine's gas system at 2.5 billion euros ($3.3 billion) to 3 billion euros ($4 billion). Ukrainian Prime Minister Yulia Tymoshenko earlier claimed that around $5.5 billion was needed to expand her country's gas transit capacity by 60 billion cubic meters a year.
Russia's President Dmitry Medvedev warned that Moscow would take into account Kiev's pipeline agreement with the EU in considering Ukraine's request for a $5 billion loan.
Moscow also delayed inter-governmental talks with Kiev, and threatened to review energy ties with Europe if its interests were disregarded.
Russian energy giant Gazprom warned that any changes to the network could affect exports and production.
Some European consumers were left without gas for more than two weeks over a conflict between Moscow and Kiev in January 2009.
Ukraine has Europe's second-largest and one of the world's longest gas transit systems stretching for 37,600 km.
