The price Ukraine pays "will grow significantly for objective reasons", he said.
 
Although Russia holds massive gas reserves of its own beneath its vast Siberian expanses, it also imports large amounts of gas from Central Asian neighbours due to a lack of investment in developing its own reserves.
 
In March, Central Asia's main producers, Kazakhstan, Turkmenistan and Uzbekistan, said that they would charge Russia "European" prices, almost double current levels, starting from 2009.
 
Ukraine currently pays Russia almost $180 per thousand cubic metres of gas.
 
Lavrov said Yushchenko had welcomed the idea of market prices as healthy for Ukraine's economy.
 
An energy price increase would put further pressure on Ukraine's overheating economy, which is struggling under soaring inflation that saw consumer prices climb 30 per cent in the year to April.
 
Nato entry opposed
 
The St Petersburg talks between the Russian and Ukrainian leaders were held on the sidelines of an economic forum.
 
For his part, Dmitry Medvedev, the Russian president, cautioned Yushchenko against entry into the North Atlantic Treaty Organisation (Nato), saying it could be in breach of a friendship treaty between the two countries.
 
Medvedev also urged Kiev not to take any unilateral steps to expel the Russian navy from the base it leases on Ukraine's Black Sea coast.
 
Ukraine's pro-Western leaders have angered Moscow by securing a commitment from Nato that it can join the alliance eventually.
 
They say they want to review the presence of the Russian Black Sea fleet in the Ukrainian port of Sevastopol.