Ukraine, Russia hold last-ditch gas talks before today’s deadline

June 16, 2014 - 3:37:50 am
Ukraine’s Prime Minister Arseny Yatseniuk (right), European Union Energy Commissioner Guenther Oettinger (third left) and other officials meet in Kiev yesterday.

KIEV: Ukraine and Russia made a last-ditch attempt to resolve a gas pricing dispute on Saturday, less than 48 hours before a Russian deadline for Kiev to pay its bills or have its supplies cut off today.

Halting the gas flow to Kiev could also disrupt supplies to the European Union, which receives gas via Ukraine, but the chances of a breakthrough have been hit by tensions over an uprising by pro-Russian separatists in east Ukraine.

Representatives of both sides and the EU’s energy commissioner, Guenther Oettinger, arrived for the talks at a Kiev hotel as night fell, with no sign of a change in their positions. “We keep our fingers crossed and hope to resolve our differences in a civilised manner. Further escalation is clearly not in the interests of any of the parties involved,” Andriy Kobolev, chief executive of Ukraine’s state gas company Naftogaz, said in an open letter before the talks started.

But the letter, and comments by Energy Minister Yuri Prodan as he arrived for the talks, made clear there was no advance on Ukraine’s latest offer — rejected by Moscow on Friday.

Russia had initially rejected the idea of holding another round of talks over the weekend, but agreed in the end to have one more try. “We are ready to seek compromise, but it is useless to put pressure on us,” Sergei Kupriyanov, spokesman for Russian state gas producer Gazprom, said in Moscow.

Gazprom Chief Executive Andrei Miller made no comment as he entered the hotel before the talks. 

The dispute is part a broader crisis in which Russia annexed Crimea from Ukraine in March following the overthrow of the country’s Moscow-leaning president, and the separatists are demanding east Ukraine be absorbed by Russia.

Tensions are high following the shooting down of a Ukrainian military transport plane by the rebels in east Ukraine and accusations by Kiev and Washington that Russia is supplying the separatists with weapons. Moscow denies this.

Gazprom has said Ukraine should pay $1.95bn, a part of its debt for Russian gas supplies, by Monday, or face being switched to a system under which it would receive only gas it pays for in advance, and possible gas supply cuts. After the failure of several rounds of talks, the last of which were in Brussels last week, Ukraine’s government ordered the energy sector, ministers and local authorities to prepare for supply cuts.

Russia initially demanded at the talks that Ukraine should pay $485 per 1,000 cubic metres of gas but then offered to remove the export duty, a move that would cut the price to $385 — around the average amount paid by Russia’s European clients.

Ukraine had held out for $268.5 until Friday, when it said it was ready to pay $326 for an interim period of 18 months while a long-term price was worked out.

Russian energy authorities said last week that the price of $385 was final, but Prodan suggested to reporters Ukraine was not ready to go beyond its offer of $326.

Russia has extended its deadline twice in the past few weeks to allow more time to reach a deal but has made clear it will not do so again.

Even so, Oettinger said there was still time to reach an agreement and promised “meetings this evening, maybe tomorrow.”

Russia meets about a third of the EU’s gas needs, and around half of the gas is delivered via pipelines that go through Ukraine.

Supply cuts would not be a big problem now because it is summer and the EU and Ukraine have enough gas in storage, but the EU suffered serious disruptions in supplies when Russia cut off supplies in a gas war with Kiev in 2009. Reuters

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