Russia, Ukraine line up gas talks

Price points: EU's Guenther Oettinger, left, urges interim solution as Russia's Alexander Novak, right, plans further talks

Russia's Energy Minister Alexander Novak said on Monday that Moscow and Kiev are set to hold a new round of talks to resolve a gas crisis on Saturday.

"I put 80% (of possibility) that the meeting will happen," Novak told reporters, adding that Russia and Ukraine are now awaiting the European Commission's decision on whether their representative would join the talks that have also involved Gazprom chief executive Alexei Miller.

Russian President Vladimir Putin agreed last year to cut the gas price for Ukraine to $268.50 per 1000 cubic metres after then-Ukrainian President Viktor Yanukovich said he would snub the EU in favour of closer ties with Russia.

But Yanukovich was toppled by mass protests in February, and Moscow hiked the price to $485. This was rejected by Kiev and Russia cut off the gas flow in June after the two sides failed to resolve their commercial dispute.

After talks with European Energy Commissioner Guenther Oettinger on Friday in Moscow, Novak said that Russia was ready to offer Ukraine a discount of $100, bringing the price per 1000 cubic metres for April to June to $385.

The proposal was rejected by Kiev, which says the rate is well above what it is prepared to pay. Ukraine has said it wants to return to the old price, while signalling it might agree to pay just above $300.

Oettinger's spokeswoman said a repayment plan should be developed over the next weeks for all the gas that has not been paid for as part of an interim solution.

The EU commissioner also said gas must not be used as a weapon in the Ukraine-Russia crisis, adding that all sides needed to work out an interim solution, given that international arbitration would not be able to resolve the dispute before the middle of 2015.

"We always said through the crisis that we don't see the gas sector as a tool for sanctions, measures and escalations. That is also true today," Oettinger said.

Gas supplies to Europe, which gets a third of its needs from Russia with around a half coming via Ukraine, were unaffected so far.

The dispute comes amid escalating tensions between the two countries, with Ukraine accusing Russia of sending weapons and men to help a separatist rebellion in the east of the country - an accusation Moscow rejects.

Gazprom has signalled that it may resume gas supplies once Ukraine pays off 2013 gas debts that it put at $1.45 billion. In total, the Russian gas exporter says Ukraine owes it more than $5 billion in unpaid bills.

Gazprom accounts for around a third of Europe's gas needs. In 2013, half of the gas consumed in Ukraine came from Russia.

Russian gas supplies to Europe were interrupted at the height of winters in 2006 and 2009 with southern Europe, which almost totally depends on Russian gas, hit the hardest.

Newsletter signup

User

Become an Upstream member!

Membership includes a subscription to our weekly newspaper providing in-depth news from the energy industry, plus full-access to this site and its archives. Still not convinced? Try our free trial.

Already a member?

Login